The Most Important Concerns Regarding the Costs of FDI for the Home-Country

question 5

Multiple Choice

The most important concerns regarding the costs of FDI for the home-country center on:

• A) the balance-of-payments and employment effects of outward FDI.
• B) the technology capture effect and the perceived loss of national sovereignty.
• C) the reverse-resource transfer effect and the exposure to foreign markets caused by FDI.
• D) the import of substantial input from abroad and being held to "economic ransom."
• E) the exposure to foreign markets and the decreased costs of production.

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Definitions:

Complete Portfolio

A combination of a risk-free asset and one or more risky assets, structured to meet the investor's risk-return objectives.

Risk-Free Asset

An asset which is assumed to have no risk of financial loss and typically refers to government bonds or bills.

Risky Portfolio

A risky portfolio comprises investments that have a higher degree of risk, aiming for potentially higher rewards but with an increased possibility of losses.

Arithmetic Average

The sum of a series of numbers divided by the count of that series of numbers, commonly used to calculate the mean value of datasets.