Question

Which of the following would be an example of foreign direct investment from the United States...

Which of the following would be an example of foreign direct investment from the United States to Brazil?

A. A firm in the U.S. purchases Brazilian corporate bonds on the Brazilian bond market.

B. A US-based multinational firm buys a factory in Brazil from a Brazilian who had acquired it cheap from a bankrupt Brazilian manufacturer.

C. A rich American lends money to a rich Brazilian, to be used in expanding the Brazilians business.

D. A New York bank uses dollars that have been deposited in it by the government of an oil exporter to buy Brazilian government bonds denominated in dollars

I know the answer is B, but can someone explain why it is?

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Answer #1

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Correct Option is B because ,

By buying a brazillian manufacturing factory means that the US company has aquired the business assets of that company abroad, by doing that the US company can establish business operation in Brazil, which is the main motive of FDI.

So , thats why this option is correct because in other options you are not able to operate in that region.

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