Which of the Following Is an Example of Direct Foreign

question 49

Multiple Choice

Which of the following is an example of direct foreign investment?

• A) A foreign citizen buys a share of stock in Ford.
• B) The German-owned BMW company builds an assembly plant near Greenville, SC.
• C) A foreign citizen lends money to General Motors by buying a GM bond.
• D) A foreign citizen travels to the United States as a tourist, spending money in the United States on various goods and services.

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Definitions:

Market Inefficiency

A condition where all available information is not fully incorporated into asset prices, leading to opportunities for higher returns.

Siamese Twin Companies

Companies listed in different countries that share an operational business but trade separately on the stock exchange.

Equity Carve-Outs

A type of corporate restructuring where a company creates a new, independent company by selling or distributing new shares of its existing division or subsidiary.

Closed-End Funds

A type of investment fund with a fixed number of shares that are traded on a stock exchange.