Stacey,a U.S.citizen,buys a bond issued by an Italian pasta manufacturer.

Question

Quizplus · Accepted Answer

Stacey's purchase of a bond from an Italian pasta manufacturer is an example of foreign portfolio investment, where she is investing in a foreign security or financial asset but does not have control over the underlying assets of the company. This type of investment increases U.S. net capital outflow as it represents an outflow of capital from the U.S. to a foreign country.