Question

role of investments quick check
which of the following is an example of foreign portfolio investment? (1 point)
○ an investor in the united kingdom purchases stock issued by a united kingdom corporation.
○ a business owner in the united kingdom purchases a united kingdom business.
○ an investor in the united kingdom purchases stock issued by a united states corporation.
○ a business owner in the united kingdom purchases a united states business.

Explanation:

To determine foreign portfolio investment, we need to identify an investment in foreign (non - domestic) financial assets (like stocks) without seeking control of the business.

• The first option: The investor and the corporation are both in the UK (domestic), so it's not foreign portfolio investment.
• The second option: Purchasing a UK business is domestic and likely direct investment (seeking control), not portfolio.
• The third option: A UK investor buys stock (portfolio investment) of a US (foreign) corporation. This fits foreign portfolio investment as it's a financial investment in a foreign entity without aiming for business control.
• The fourth option: Purchasing a US business is direct investment (aiming for control) rather than portfolio investment.

Answer:

C. An investor in the United Kingdom purchases stock issued by a United States corporation.