A Home Country Encourages Outflows of Foreign Direct Investment Because

question 11

Multiple Choice

A home country encourages outflows of foreign direct investment because it ________.

• A) helps in replacing jobs at home
• B) sends resources out of the home country
• C) tends to increase the long-term competitiveness of firms
• D) takes the place of all the exports and imports in the country

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Definitions:

Market Interest Rate

The prevailing rate of interest available in the market for securities of similar risk and maturity.

Effective Interest Rate

The actual return on investment or cost of a loan, taking into account the compounding of interest, as opposed to the nominal rate.

Stated Interest Rate

The annual interest rate declared on a loan or investment, not taking into account compounding or fees.

Premium Amortized

The process of gradually writing off the initial cost of a premium over the period of the bond to match it with the interest earned.