Suppose Connie, a Canadian citizen, buys bonds issued by an automobile manufacturer in Sweden. What would her expenditure be?
A) Canadian foreign direct investment that would increase Canadian net capital outflow
B) Canadian foreign direct investment that would decrease Canadian net capital outflow
C) Canadian foreign portfolio investment that would increase Canadian net capital outflow
D) Canadian foreign portfolio investment that would decrease Canadian net capital outflow

Question

Quizplus · Accepted Answer

Connie's purchase of bonds issued by a Swedish automobile manufacturer represents a Canadian foreign portfolio investment, as she is investing in foreign securities. This type of investment would increase Canadian net capital outflow, as she is sending funds from Canada to Sweden in exchange for the bonds.

Suppose Connie, a Canadian Citizen, Buys Bonds Issued by an Automobile