Forms of FDI

Description: This quiz will test your knowledge on the various forms of Foreign Direct Investment (FDI).
Number of Questions: 15
Created by:
Tags: fdi forms of fdi investment
Attempted 0/15 Correct 0 Score 0

Which of the following is NOT a form of FDI?

  1. Greenfield Investment

  2. Mergers and Acquisitions

  3. Joint Ventures

  4. Portfolio Investment


Correct Option: D
Explanation:

Portfolio investment is not considered FDI as it does not involve the establishment of a lasting interest in a foreign company.

In a Greenfield Investment, the foreign investor:

  1. Acquires an existing company

  2. Establishes a new company from scratch

  3. Forms a partnership with a local company

  4. Purchases shares in a foreign company


Correct Option: B
Explanation:

Greenfield investment involves the establishment of a new company in a foreign country, starting from the ground up.

Which form of FDI involves the acquisition of a controlling interest in an existing foreign company?

  1. Greenfield Investment

  2. Mergers and Acquisitions

  3. Joint Ventures

  4. Portfolio Investment


Correct Option: B
Explanation:

Mergers and acquisitions involve the purchase of a controlling stake in an existing foreign company, resulting in a change in ownership and management.

In a Joint Venture, the foreign investor:

  1. Acquires an existing company

  2. Establishes a new company from scratch

  3. Forms a partnership with a local company

  4. Purchases shares in a foreign company


Correct Option: C
Explanation:

A joint venture involves the formation of a new company or project through a partnership between a foreign investor and a local company.

Which form of FDI is characterized by the purchase of a minority stake in a foreign company?

  1. Greenfield Investment

  2. Mergers and Acquisitions

  3. Joint Ventures

  4. Portfolio Investment


Correct Option: D
Explanation:

Portfolio investment involves the purchase of a minority stake in a foreign company, without any significant influence over its management or operations.

Which form of FDI is most common in developing countries?

  1. Greenfield Investment

  2. Mergers and Acquisitions

  3. Joint Ventures

  4. Portfolio Investment


Correct Option: A
Explanation:

Greenfield investment is often preferred in developing countries as it allows foreign investors to establish new businesses and create employment opportunities.

Which form of FDI is most common in developed countries?

  1. Greenfield Investment

  2. Mergers and Acquisitions

  3. Joint Ventures

  4. Portfolio Investment


Correct Option: B
Explanation:

Mergers and acquisitions are more common in developed countries, where there are many existing companies that can be acquired.

Which form of FDI is most likely to involve technology transfer?

  1. Greenfield Investment

  2. Mergers and Acquisitions

  3. Joint Ventures

  4. Portfolio Investment


Correct Option: A
Explanation:

Greenfield investment often involves the transfer of new technologies and expertise to the host country.

Which form of FDI is most likely to involve job creation?

  1. Greenfield Investment

  2. Mergers and Acquisitions

  3. Joint Ventures

  4. Portfolio Investment


Correct Option: A
Explanation:

Greenfield investment typically involves the establishment of new businesses, which leads to job creation.

Which form of FDI is most likely to involve the repatriation of profits?

  1. Greenfield Investment

  2. Mergers and Acquisitions

  3. Joint Ventures

  4. Portfolio Investment


Correct Option: D
Explanation:

Portfolio investment often involves the repatriation of profits to the home country of the investor.

Which form of FDI is most likely to involve the sharing of management control?

  1. Greenfield Investment

  2. Mergers and Acquisitions

  3. Joint Ventures

  4. Portfolio Investment


Correct Option: C
Explanation:

Joint ventures typically involve the sharing of management control between the foreign investor and the local partner.

Which form of FDI is most likely to involve the transfer of intellectual property?

  1. Greenfield Investment

  2. Mergers and Acquisitions

  3. Joint Ventures

  4. Portfolio Investment


Correct Option: A
Explanation:

Greenfield investment often involves the transfer of intellectual property, such as patents and trademarks, to the host country.

Which form of FDI is most likely to involve the development of local infrastructure?

  1. Greenfield Investment

  2. Mergers and Acquisitions

  3. Joint Ventures

  4. Portfolio Investment


Correct Option: A
Explanation:

Greenfield investment often involves the development of new infrastructure, such as roads, railways, and power plants.

Which form of FDI is most likely to involve the promotion of local entrepreneurship?

  1. Greenfield Investment

  2. Mergers and Acquisitions

  3. Joint Ventures

  4. Portfolio Investment


Correct Option: C
Explanation:

Joint ventures often involve the transfer of skills and knowledge to local partners, promoting local entrepreneurship.

Which form of FDI is most likely to involve the development of local skills and expertise?

  1. Greenfield Investment

  2. Mergers and Acquisitions

  3. Joint Ventures

  4. Portfolio Investment


Correct Option: A
Explanation:

Greenfield investment often involves the training and development of local employees, leading to the development of local skills and expertise.

- Hide questions