A German Automaker Builds a Factory in the United States

question 130

Multiple Choice

A German automaker builds a factory in the United States.This is considered:

• A) foreign direct investment.
• B) foreign portfolio investment.
• C) capital account investment.
• D) current account investment.

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Definitions:

Uncertainty

A situation characterized by the lack of predictability or definite knowledge about an outcome or result.

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Balance Sheet Hedge

A financial strategy used to reduce the risk of currency fluctuations affecting the value of assets and liabilities reported in a company's balance sheet.

Exchange Rate Fluctuations

Variations in the value of one currency relative to another, affecting international trade and investments.