Question

The difference between Foreign Direct investment and portfolio investment is that

a) Portfolio investment moitly represents the sole and purchase of foreign financial assets such as stocks and bonds that do not involve a transfer of control
b) Foreign Direct investment mostly represents the sale and purchase of foteign financiol assets such as stocks whereos Portiolio investment mostly irvolves the sales and purchase of foreign bonds.
c)Portfolo investinent takes place as fimis attempt to take actvantage of vaious market inperfections.
d) all of the options

Answer 1

Portfolio investment entails a small, often short-term stake with no management control, whereas Foreign Direct Investment involves a larger stake with some level of managerial responsibility and a long-term focus.

Step-by-step explanation:

The difference between Foreign Direct Investment (FDI) and portfolio investment is that portfolio investment involves purchasing a relatively small stake in a company—typically less than ten percent—with no managerial control and often with a short-term focus. On the other hand, FDI implies buying more than ten percent of a company, which often comes with some level of managerial responsibility, reflecting a more long-term investment strategy. Furthermore, portfolio investments can be liquidated much faster than FDIs. For instance, selling bonds issued by the government of the United Kingdom can be done with just a phone call or a few computer clicks, whereas selling a company, such as an automobile parts manufacturer in the UK, can take weeks or even months to execute.