Foreign direct investment occurs when a company:
A)purchases foreign securities such as stocks and bonds.
B)establishes foreign operating units.
C)enters into a contractual agreement involving exchange of services and payments.
D)engages in international trade.
E)gives aid to a Third World country.

Question

Quizplus · Accepted Answer

Foreign direct investment refers to a company establishing operating units in a foreign country, which can include setting up new subsidiaries, opening branches, or acquiring existing companies. The other options - purchasing foreign securities, contractual agreements, international trade, and giving aid - do not fall under the definition of foreign direct investment.

Foreign Direct Investment Occurs When a Company