What Is the Difference Between Foreign Direct Investment and Foreign

question 114

Multiple Choice

What is 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:

Altruistic Behavior

Actions intended to benefit others without expecting personal gain.

Costs And Benefits

Costs and benefits refer to the negative and positive outcomes, respectively, that are considered when making decisions or evaluating actions and their impacts.

Social Trap

A situation in which a group of individuals act against their best interests by pursuing short-term gains, leading to a worse situation for all in the long term.

Collective Harm

Damage or injury that affects a group or community rather than an individual.