Understanding Foreign MNC Investment
The question asks for the specific term used when foreign Multinational Corporations (MNCs) invest money into a country's businesses.
Analyzing Investment Terms
Let's examine the options:
- 1. Direct investment: This is a broad term and could refer to domestic investment as well. It doesn't specifically indicate the foreign origin.
- 2. Foreign direct investment: This term precisely describes investments made by entities based in one country into businesses located in another country, with the goal of establishing control or significant influence. This aligns perfectly with investment by foreign MNCs. Often abbreviated as FDI.
- 3. Foreign collateral: Collateral refers to assets pledged as security for a loan. It is not a type of investment itself.
- 4. Foreign monetary investment: This is not a standard economic or financial term. While foreign investment involves money, this specific phrasing is inaccurate and redundant.
Therefore, the correct and standard term for money invested by foreign MNCs is Foreign direct investment.
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Important Questions from External Sector and Currency Exchange rate
Consider the following :
1. Foreign currency convertible bonds
2. Foreign institutional investment with certain conditions
3. Global depository receipts
4. Non-resident external deposits
Which of the above can be included in Foreign Direct Investments?
What is the idea that a country should be self-sufficient and not participate in international trade called?
According to Harrod-Domar growth model for the full capacity use of capital and labour or for full employment it is necessary that
Consider the following statements:
(1) Hike in global oil prices can widen the Current Account Deficit (CAD) of India.
(2) Higher CAD can lead to depreciation of the currency.
Which among the above statements is/are correct?
Which of the following affect the pricing of a currency option?
(A) Spot exchange rate
(B) Exercise rate
(C) Foreign risk-free rate of return
(D) Domestic risk-adjusted rate
(E) Time to expiration
Choose the correct answer from the options given below:
