Question content area Part 1 An example of foreign direct investment is Part 2 A. buying stock in a German company. B. building a Starbucks shop in Canada. C. a Mexican buying dollars for pesos. D. All of the above.
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FDI refers to an investment made by a company or individual in one country in business interests in another country, typically by establishing business operations or acquiring assets in the other country. Show more…
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Which of the following are direct foreign investments? a. A Saudi businessman buys $\$ 10$ million of IBM stock. b. The same businessman buys a New York apartment building. c. A French company merges with an American company; stockholders in the U.S. company exchange their stock for shares in the French firm. d. An Italian firm builds a plant in Russia and manages the plant as a contractor to the Russian government.
For each of the following, specify whether the foreign direct investment is horizontal or vertical; in addition, describe whether that investment represents an FDI inflow or outflow from the countries that are mentioned. a. McDonald's (a U.S. multinational) opens up and operates new restaurants in Europe. b. Total (a French oil multinational) buys ownership and exploration rights to oil fields in Cameroon. c. Volkswagen (a German multinational auto producer) opens some new dealerships in the United States. (Note that, at this time, Volkswagen does not produce any cars in the United States.) d. Nestlé (a Swiss multinational producer of foods and drinks) builds a new production factory in Bulgaria to produce Kit Kat chocolate bars. (Kit Kat bars are produced by Nestlé in 17 countries around the world.)
How would the following transactions affect Canada's net capital outflow? Also, state whether each involves direct investment or portfolio investment. a. A Canadian cellular phone company establishes an office in the Czech Republic. b. Harrod's of London sells shares to the Ontario Teachers' Pension Plan. c. Honda expands its factory in Alliston, Ontario. d. A Bank of Montreal mutual fund sells its Volkswagen shares to a French investor.
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