What's the Difference Between Foreign Direct Investment and Foreign Portfolio

question 1

Multiple Choice

What's the difference between foreign direct investment and foreign portfolio investment?

• A)Foreign direct investment involves purchases of foreign stock or bonds by individuals or firms,while foreign portfolio investment involves a firm purchasing or building a facility in a foreign country.
• B)Individuals engage in foreign portfolio investment,but only firms can engage in foreign direct investment.
• C)Foreign direct investment only takes place when governments make official purchases or foreign investments,while foreign portfolio investment takes place when firms,individuals,or the government purchase foreign investments.
• D)Foreign direct investment can give a low-income country access to funds and technology it would not otherwise have,but foreign portfolio investment does not expand that access.

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Definitions:

Lowest Price

The minimum price at which a product or service is available in the market.

Short Run

A period in economics where at least one factor of production is considered fixed, allowing only some variables, like output, to change.

Short Run

A period in economics during which at least one input, such as plant size, is fixed and cannot be changed.

Firm's Output

The total quantity of goods or services produced by a company or business within a specific period.