Foreign Investment and India

The establishment of a wholly new operation in a foreign country is called:

• An acquisition

• A merger

• A greenfield investment

• A multinational venture

When firms invest in the same industry overseas as it operate back at home is called...

• Vertical FDI

• Horizontal FDI

Foreign Direct Investment or FDI occurs when a company from one country invests in another country as an effort to secure lasting interest in the other country's enterprises to produce and/market a product or service.

• True

• False

Which of the following best describes the term "Foreign Direct Investment"?

• when a country makes an investment into a company

• when a company makes an investment into a foreign country

• when a domestic country invests into its own companies

• when foreign individuals invest in domestics stock market

___________ is a tax that a government places on certain imported products

• Tariff
• Embargo 
• Quota
• Deal

One reason direct investment may be prefered to portfolio is

• it fills the savings investment gap.

• it doesn't pose a threat to national sovereignty

• it doesn't create an outflow on primary income.

• it is more long term and stable.

Which of the following is NOT a benefit of FDI and MNCs?

• Increased output & Increased Wages

• Increased Employment

• Increased Exports & Increased tax revenue

• Increase in Social Welfare

One reason direct investment may be prefered to portfolio is

• it fills the savings investment gap.

• it doesn't pose a threat to national sovereignty

• it doesn't create an outflow on primary income.

• it is more long term and stable.

Portfolio investment into Australia includes debt and equity securities. These equity securities

• give the foreign investor control of the Aust company.

• are purchases of less than 10% of the shares of a company.

• are mainly loans.

• add to Australia's overseas assets.

Which of the following is likely to encourage more portfolio investment into Australia?

• Interest rates in Australia rising above those in the US.

• Interest rates in Australia falling below those in the US.