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Which of the following is a form of foreign direct investment?

A. mutual fund ownership
B. foreign stock ownership
C. foreign bond ownership
D. participation in a joint venture

1 Answer

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Final answer:

The correct answer is D. participation in a joint venture, as this aligns with the characteristic of foreign direct investment where more than ten percent of a company is purchased along with some form of managerial control.

Step-by-step explanation:

The form of foreign direct investment (FDI) among the options provided is D. participation in a joint venture. Unlike mutual fund ownership, foreign stock ownership, or foreign bond ownership, which are all typically considered portfolio investments due to the investor usually purchasing less than ten percent of a company and often with a short term focus, foreign direct investment is characterized by a more substantial, typically more than ten percent, stake in a company. FDI often entails managerial influence and a long-term commitment to the strategic interests of the invested enterprise. For instance, when the Belgian company InBev purchased Anheuser-Busch, it was much more than just buying stock; it was a strategic acquisition that involved taking over a U.S. firm, supplying euros and demanding U.S. dollars, to gain significant influence and managerial rights.

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