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International trade and business

Briefly describe portfolio investments and foreign direct investment (FDI) How do they differ?

What is international trade. Why does it occur?

How do political factors influence international trade and investment?

Explain the different techniques businesses can use to protect themselves from future changes in exchange rates.

What is the role of international banks in the foreign exchange market?

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Briefly describe portfolio investments and foreign direct investment (FDI) How do they differ?

Portfolio investments are the investments into securities whether in the domestic or foreign countries through portfolio manager.

Foreign direct investment (FDI) is defined as a firm based in one country (the 'home country') owning 10 percent or more of the stock of a company located in a foreign country (the 'host country'). This amount of stock is generally enough to give the home country firm significant control rights over the host country firm. Most FDI is in wholly-owned or nearly wholly-owned subsidiaries. There are also nonequity forms of FDI which include subcontracting, management contracts, franchising, and licensing and product sharing.

The difference between the portfolio investments and foreign direct investment is that the portfolio investments allow the investors to be able to invest in many foreign companies that will provide the best returns on investment while the foreign direct investment is investing in a limited number of companies with the purpose to expand its market or production capacity. Moreover, for the portfolio investments, ...

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