Portfolio of foreign securities

Reference no: EM13754001

TRUE/FALSE

1. FPI refers to investment in a portfolio of foreign securities such as stocks and bonds that do not entail the active management of foreign assets.

2. A type of FDI in which the firm moves upstream or downstream in different value chain stages in a host country is called horizontal FDI.

3. Vertical FDI refers to producing the same products or offering the same services in a host country as firms do at home.

4. FDI stock refers to accumulation of inbound FDI in a country or outbound FDI from a country.

5. If firms from country A undertake $20 billion of FDI in firms from country B in year 1, and another $20 billion in year 2, then we can say that in each of those two years, B receives annual FDI outflows of $20 billion, and A generates annual FDI inflows of $20 billion.

6. The share of FDI-based value added of foreign affiliates of MNEs in world GDP rose from 7% in 1990 to 10% in 2006.

7. The resource-based view argues that recent expansion of FDI is indicative of generally friendlier policies, norms, and values associated with FDI.

8. Internalization refers to the replacement of cross-border markets (such as importing and exporting) with one firm (the MNE) locating in two or more countries.

9. An external market transaction in which firms buy and sell technology is called market imperfections.

10. The benefit of ownership lies in the combination of equity ownership rights and management control rights.

11. Implicit knowledge can be written down and transferred without losing much of its richness.

12. Markets governed by rules, regulation, and norms are designed to reduce costs associated with doing business.

13. International transactions are generally as effective as those governing domestic transactions.

14. FDI may be viewed as a reflection of firm motivation to extend firm-specific capabilities abroad and their responses to overcome imperfections and failures.

15. A political view that is hostile to FDI is called horizontal FDI.

16. Between the 1950s and the early 1980s, the radical view was influential throughout Africa, Asia, Eastern Europe, and Latin America.

17. Most countries practice a totally "free market" view.

18. Brazil, China, Hungary, India, Ireland, and Russia have adopted more FDI-friendly policies.

19. Capital outflow can help improve a host country's balance of payments.

20. FDI creates jobs both directly and indirectly.

Reference no: EM13754001

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