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Kevin purchased selected securities from the Japan stock market. What type of international investment does this...

Kevin purchased selected securities from the Japan stock market. What type of international investment does this transaction represent?

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Answer #1

International investment can be classified into different categories like Commercial loans, Official flows, Foreign Direct Investment and Foreign Portfolio Investment. Commercial loans are the bank loans issued to foreign business or government. Official flows are the financial assistance provided by one government to the other nation. Foreign direct investment takes place when the investors acquire material assets such as property, plants and equipments in a foreign country for the manufacture of goods and services. Portfolio investment is investing in stocks and bonds of a foreign enterprise.

The purchase of securities from the Japan stock market is Portfolio Investment.

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