Consider the following two cases. In the first, a U.S. firm purchases a majority
ID: 1154365 • Letter: C
Question
Consider the following two cases. In the first, a U.S. firm purchases a majority stake in a foreign firm. In the second, a U.S. firm builds a new production facility in a foreign country. Both are ________, with the first referred to as ________ and the second as ________.
(a) foreign direct investment (FDI) outflows; greenfield; mergers and acquisitions
(b) foreign direct investment (FDI) inflows; mergers and acquisitions; greenfield
(c) foreign direct investment (FDI) outflows; mergers and acquisitions; greenfield
(d) foreign direct investment (FDI) inflows; greenfield; mergers and acquisitions
Explanation / Answer
Both are the examples of Foreign direct outflow because a US firm is buying stakes in the companies outside the national boundary. the first is an example of the merger because the US firm is investing in a firm existing already and the second is an example of Greenfield investment because they are developing something from a scratch.
The answer is "C".