The Basic Motive for International Portfolio Investments Is

question 27

Multiple Choice

The basic motive for international portfolio investments is

• A)to earn higher returns domestically than are possible abroad.
• B)to earn higher returns abroad than are possible domestically.
• C)to earn returns domestically on incomes earned abroad.
• D)to earn returns abroad that cannot be taxed domestically.

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Definitions:

Relative Price

The price of one good or service compared to another, usually expressed as a ratio or quotient.

Substitution Effect

The change in consumption patterns due to a shift in the relative prices of goods, leading consumers to substitute one good for another.

Input Price

The cost of resources (labor, materials, etc.) used in the production of goods or services.

Complementary

Goods or services that are often used together, such that the increase in consumption of one leads to an increase in the consumption of the other.