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B Com Exam  >  B Com Tests  >  Test: Foreign Direct Investment Concept - 1 - B Com MCQ

Test: Foreign Direct Investment Concept - 1 - B Com MCQ


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10 Questions MCQ Test - Test: Foreign Direct Investment Concept - 1

Test: Foreign Direct Investment Concept - 1 for B Com 2024 is part of B Com preparation. The Test: Foreign Direct Investment Concept - 1 questions and answers have been prepared according to the B Com exam syllabus.The Test: Foreign Direct Investment Concept - 1 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Foreign Direct Investment Concept - 1 below.
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Test: Foreign Direct Investment Concept - 1 - Question 1
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What is the term for an investment made by a company or individual in one country in business interests in another country, which involves establishing business operations or acquiring business assets in the foreign country?

Detailed Solution for Test: Foreign Direct Investment Concept - 1 - Question 1
Foreign Direct Investment (FDI) refers to an investment made by a company or individual in one country in business interests in another country, involving the establishment of business operations or the acquisition of business assets in the foreign country. It is a key driver of economic growth and can include activities such as setting up subsidiaries, acquiring ownership or control in foreign companies, and contributing to the development of the host country's economy.
Test: Foreign Direct Investment Concept - 1 - Question 2
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In the context of FDI, what is the minimum ownership stake required to establish effective control of a foreign-based company, according to OECD guidelines?

Detailed Solution for Test: Foreign Direct Investment Concept - 1 - Question 2
According to OECD guidelines, a minimum ownership stake of 10% in a foreign-based company is typically required to establish effective control in the context of Foreign Direct Investment (FDI). This means that an investor acquiring 10% or more of the ordinary shares or voting shares of a foreign company can exercise significant influence over the company's decision-making.
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Test: Foreign Direct Investment Concept - 1 - Question 3
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What type of FDI involves an investor establishing the same type of business operation in a foreign country as it operates in its home country?

Detailed Solution for Test: Foreign Direct Investment Concept - 1 - Question 3
Horizontal FDI refers to a type of Foreign Direct Investment (FDI) in which the investor establishes the same type of business operation in a foreign country as it operates in its home country. For example, a cell phone provider based in the United States opening up stores in China would be considered a horizontal FDI.
Test: Foreign Direct Investment Concept - 1 - Question 4
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Which factor significantly influences FDI in industries that require higher skilled labor, such as pharmaceuticals and electronics?
Detailed Solution for Test: Foreign Direct Investment Concept - 1 - Question 4
In industries that require higher skilled labor, such as pharmaceuticals and electronics, the availability of high labor productivity and skills significantly influences Foreign Direct Investment (FDI). Investors are attracted to countries where there is a combination of low wages and a skilled workforce, making it an ideal location for such industries.
Test: Foreign Direct Investment Concept - 1 - Question 5
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Which type of investment is attracted to countries with lower wage rates and is often associated with labor-intensive production?
Detailed Solution for Test: Foreign Direct Investment Concept - 1 - Question 5
Horizontal FDI is attracted to countries with lower wage rates and is often associated with labor-intensive production. In this type of Foreign Direct Investment (FDI), the investor establishes the same type of business operation in a foreign country as it operates in its home country, taking advantage of lower labor costs.
Test: Foreign Direct Investment Concept - 1 - Question 6
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Which investment type involves an investor acquiring different but related business activities in a foreign country that are essential for its own production process?
Detailed Solution for Test: Foreign Direct Investment Concept - 1 - Question 6
Vertical FDI involves an investor acquiring different but related business activities in a foreign country that are essential for its own production process. For example, a manufacturing company may acquire a foreign company that supplies parts or raw materials required for its manufacturing operations.
Test: Foreign Direct Investment Concept - 1 - Question 7
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Which factor can discourage foreign investment due to uncertainty and economic crisis in a country?
Detailed Solution for Test: Foreign Direct Investment Concept - 1 - Question 7
Political stability is a crucial factor in attracting foreign investment. Countries with uncertain political situations can discourage foreign investment, as investors seek a stable and predictable environment for their investments. Economic crisis and political unrest can be significant deterrents to foreign investment.
Test: Foreign Direct Investment Concept - 1 - Question 8
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What is the term for the process of reshuffling of ledger entries in Western and Japanese banks, where resource transfers from rich to developing countries occur through loans and deposits?
Detailed Solution for Test: Foreign Direct Investment Concept - 1 - Question 8
Foreign Portfolio Investment (FPI) is the process of reshuffling of ledger entries in Western and Japanese banks, where resource transfers from rich to developing countries occur through loans and deposits. It involves the movement of funds and investments without establishing business operations or acquiring assets in the foreign country.
Test: Foreign Direct Investment Concept - 1 - Question 9
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What was the total FDI equity inflow for the telecommunication sector during April-September 2017 in India, as per data provided?
Detailed Solution for Test: Foreign Direct Investment Concept - 1 - Question 9
As per the data provided, the telecommunication sector attracted the highest FDI equity inflow of US$ 6.08 billion during April-September 2017 in India. This sector received significant foreign investment during that period.
Test: Foreign Direct Investment Concept - 1 - Question 10
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What is the primary objective of the Indian government's Make in India campaign in terms of attracting foreign investment?
Detailed Solution for Test: Foreign Direct Investment Concept - 1 - Question 10
The primary objective of the Indian government's Make in India campaign is to boost Foreign Direct Investment (FDI) by encouraging foreign companies to invest in India and participate in the country's economic growth and development. This initiative aims to make India an attractive destination for foreign investors.
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