The purchase of physical assets or a significant amount of ownership (stock)of a company in another country to gain a measure of management control is called ________.
A)foreign direct investment
B)portfolio investment
C)ownership control
D)vertical integration

Question

Quizplus · Accepted Answer

Foreign direct investment involves the acquisition of physical assets or a significant amount of ownership in a foreign company to gain control of management decisions. Portfolio investment involves buying a smaller stake in a foreign company for the purpose of earning a return through dividend income or capital gains, but without gaining management control. Ownership control is not a commonly used term, and vertical integration involves the acquisition of companies within the same industry to achieve greater control over the production process.

The Purchase of Physical Assets or a Significant Amount of Ownership