Question

Multiple choice

2. Foreign investment Aa Aa A loan made at the market rate of interest from an American banking syndicate to an entrepreneur in a developing country is an example of which of the following types of foreign investment? O O Foreign direct investment Portfolio investment Trade credit Commercial bank loan Which of the following statements are true of foreign investment in developing countries? Check all that apply. O It tends to be concentrated in capital-intensive industries. It always decreases the balance of payments deficit. The foreign investor always plays some role in the operation of the business in the developing country. It always creates a large number of jobs for domestic workers in developing countries. O

Select all that apply

Answer 1

Answer 1 - Option C

Commercial bank loan

The american bank offers the loan to the entrepreneurer in a developing country will be called just a common commercial loan.

It will not be trade credit because the trade or the activity has not be specified. Investment is not been done in a foreign country hence it will not be FDI . It will not be portfolio investment because the investment has not been made in any asset etc in another country.

Answer 2 - Option c

- Option D

The foreign investor always plays some role in the operation of the business in the developing country.

It always creates a large number of jobs for domestic workers in developing countries.

Option A and B will not be appropriate because it is not necessary that the investment is capital intensive. If the labor is cheap , it will be labor intensive.

It may not always decrease the BOP deficit. It depends upon if that FDI is favourable for developing country or not.