Freehold Investment Corp. (Scenario)
Dan Freehold and his business partner, Bethany Quinn, are successful investors engaged in a variety of enterprises. Recently Dan and Bethany have decided to expand their foreign investing operations. They hold a meeting for individuals interested in participating in certain overseas ventures.
-At the meeting, Dan explains to the attendees that Freehold direct investment projects differ from international trade in that ________.
A) the firm itself is crossing international borders to purchase foreign assets
B) the firm is restricting its investments to stocks and does not purchase mutual funds
C) the firm has chosen to focus strictly on the technology sector
D) the firm is engaging in the transfer of products across national borders

Question

Quizplus · Accepted Answer

Direct investment involves a firm crossing international borders to purchase or establish physical assets, such as factories or businesses, in a foreign country, unlike international trade which involves the exchange of goods and services across borders.