Sam,a U.S.citizen,buys bonds issued by a Greek company that bottles olives.Sam's purchase is
A)foreign direct investment.By itself it increases U.S.net capital outflow.
B)foreign direct investment.By itself it decreases U.S.net capital outflow.
C)foreign portfolio investment.By itself it increases U.S.net capital outflow.
D)foreign portfolio investment.By itself it decreases U.S.net capital outflow.

Question

Quizplus · Accepted Answer

Sam's purchase of bonds in a Greek company is an example of foreign portfolio investment, which means that he is only holding financial assets and has no management control over the company. As such, it increases the U.S. net capital outflow as the U.S. is investing in foreign assets.

Sam,a USCitizen,buys Bonds Issued by a Greek Company That Bottles Olives