Question

A U.S. mutual fund buys stock issued by a corporation in Colombia. A U.S. grocery store...

A U.S. mutual fund buys stock issued by a corporation in Colombia. A U.S. grocery store chain builds and manages a new warehouse in Honduras. Which one(s) of these is foreign direct investment? Which one(s) would be taken into account when computing U.S. net capital outflows?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Foreign Direct Investment means investment by the resident of one Country into the business interest located in some other country. It includes establishment of business entities, production facility or taking over the existing production facilities(through aquisition). However, it is different from Foreign Portfolio Investment, which merely involves Investment by the Residents of one country in the form of purchase of stocks or any financial asset of the business located in other country.

Thus, according to above given definition of Foreign Direct Investment, Buliding and Managing a new warehouse in Honduras by a US grocery store chain is Foreign Direct Investment.

Both the above transactions would be taken into account when computing US net capital outflows because both of the above transactions lead to Outflow of Capital from US.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose an American buys stock issued by an Argentinian corporation. The Argentinian firm uses the proceeds...
Suppose an American buys stock issued by an Argentinian corporation. The Argentinian firm uses the proceeds from the sale to build a new office complex. This is an example of foreign investment in Argentina. Which of the following policies are consistent with the goal of increasing productivity and growth in developing countries? Check all that apply. Increasing taxes on income from savings Imposing restrictions on foreign ownership of domestic capital Pursuing inward-oriented policies Providing tax breaks and patents for firms...
5. Economic growth and public policy Suppose an American buys stock issued by an Argentinian corporation....
5. Economic growth and public policy Suppose an American buys stock issued by an Argentinian corporation. The Argentinian firm uses the proceeds from the sale to build a new office complex. This is an example of foreign investment in Argentina. Which of the following policies are consistent with the goal of increasing productivity and growth in developing countries? Check all that apply. Protecting property rights and enforce contracts. Imposing restrictions on foreign ownership of domestic capital. Pursuing inward-oriented policies. Increasing...
5. Economic growth and public policy Suppose an American buys stock issued by an Argentinian corporation....
5. Economic growth and public policy Suppose an American buys stock issued by an Argentinian corporation. The Argentinian firm uses the proceeds from the sale to build a new office complex. This is an example of foreign investment in Argentina. question 1: Which of the following policies are consistent with the goal of increasing productivity and growth in developing countries? Check all that apply. Pursuing inward-oriented policies. Protecting property rights and enforce contracts. Imposing restrictions on foreign ownership of domestic...
You are CEO of a tech company, which is a C corporation. Your company’s stock is...
You are CEO of a tech company, which is a C corporation. Your company’s stock is traded in the NYSE. Your company issued $200 million 10-year investment-grade bonds to public investors two years ago .A month ago, your company issued $50 million 90-day commercial papers. Your company wants to develop a new product. You were told by the operations and marketing managers that the new project is very promising. Your company needs $75 million to finance the project. The finance...
1. When a corporation buys back its own stock the stock is then called: a.Bond stock...
1. When a corporation buys back its own stock the stock is then called: a.Bond stock b. Treasury stock c.Preferred stock 2. Which type of business would have a Retained Earnings account in the Shareholder’s Equity section? a.Sole proprietorship b. Partnership c.Corporation 3. The interest tax shield allows a corporation to deduct interest expense from its Earnings Before Interest and Tax before the tax amount is calculated on Earnings Before Tax, giving the corporation a tax deduction for its interest...
7. According to the textbook, which of the following statements is (are) correct? (x) If net...
7. According to the textbook, which of the following statements is (are) correct? (x) If net exports are zero, the country has balanced trade. (y) If a country sells $50 billion of goods and services to people overseas and buys $45 billion of goods and services from them, then it has a trade surplus. (z) If a country has $2.4 billion of net exports and purchases $4.8 billion of goods and services from foreign countries, then it has $7.2 billion...
The U.S. current account deficit improved slightly from 2007 to 2010 because spending on imports fell...
The U.S. current account deficit improved slightly from 2007 to 2010 because spending on imports fell due to an overall fall in consumption. state, local, and federal government budget deficits increased. worldwide economic growth prompted U.S. exports. capital controls restricted capital inflow. Out of the following activities, which one is the TRUE statement? The free movement of financial capital is desirable for all countries. Foreign direct investment items have more liquidity than foreign portfolio investment items. In most of the...
What are the biggest challenges Costco will experience in trying to expand globally? Costco Wholesale Corporation...
What are the biggest challenges Costco will experience in trying to expand globally? Costco Wholesale Corporation is an American membership-only warehouse club selling a large range of products. The company opened its first warehouse in 1983 and currently is the second largest retailer in the U.S.—Walmart is number one. Costco, however, is the largest membership warehouse club chain in the U.S. Costco operates about 700 warehouses across the U.S. and abroad. As of November 2015, the company had international locations...
Organizing Organizing is an important task of managers. Once the organization’s goals and plans are in...
Organizing Organizing is an important task of managers. Once the organization’s goals and plans are in place, the organizing function sets in motion the process of seeing that those goals and plans are pursued. When managers organize, they’re defining what work needs to get done and creating a structure that enables work activities to be completed efficiently and effectively by organizational members hired to do that work. As Starbucks continues its global expansion and pursues innovative strategic initiatives, managers must...
Analysis: This section should include the issue register as a bare minimum, but may include also...
Analysis: This section should include the issue register as a bare minimum, but may include also why-why diagrams, a Pareto chart, a waste table and/or value-added analysis table. Flow analysis or simulation of this case study might be possible but might require making a lot of assumptions given the provided data. The first part of the project: Introduction    Walmart has continued to retain the top position on the Fortune 500 list for a consecutive fifth year. The brand has...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT