When Nestlé, a Swiss firm, bought the American firm Carnation, it was engaged in foreign direct investment. If Nestlé had only bought a non-controlling number of shares of the firm,
A)Nestlé would have been engaged in portfolio investment.
B)Nestlé would have been engaged in a cross-border acquisition.
C)it would depend if they bought the shares from an American or a Canadian.
D)none of the above

Question

Quizplus · Accepted Answer

Buying a non-controlling number of shares of a firm is considered portfolio investment, while foreign direct investment involves acquiring a controlling stake in a company. Since Nestlé bought Carnation, a controlling stake, it is engaged in foreign direct investment.

When Nestlé, a Swiss Firm, Bought the American Firm Carnation