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- If you invest in a foreign company by buying 30 percent of its shares of stock, you have engaged in A. moral hazard. B. portfolio investment. C. foreign direct investment. D. adverse selection.Capital formation is said to be facilitated by financial intermediation. Describe the way in which this process takes place and illustrate it with an example.5. Economists continue to be puzzled by the appar- ent home bias of investors across countries. With mean-variance preferences, investors ought to allo- cate much more of their wealth to foreign equities and bonds. Three explanations for the phenomenon are given below, all of them based on empirical facts. For each one, discuss whether the statements are true or false and in what sense they help, or fail, to rationalize the home bias puzzle. In answering the questions, assume that investors have mean- variance preferences. a. Investors should not hold foreign equities be- cause they are more volatile and have been yielding lower returns than U.S. stocks in re- cent years. b. Home bias arises because investors face an ad- ditional risk when investing internationally— namely, currency risk. Because currency risk makes returns more volatile but does not lead to a higher expected return, investing more in domestic…
- What is the difference between foreign direct investment and portfolio investment?A. A Turkish firm pays $ 10000 dividends to foreign residents, who choose to holddividends in the form of bank deposits in Turkey.B. Turkish government sends $ 2000 million worth of food aid to AfricaC. A tourist travels to Turkey and spends $5000.D. Turkey sold $15000 worth dress to France.E. Turkey bought $10000 worth watches from China. Where would you record (which accounts) these transactions in the BOP ofTurkey? Explain. Calculate current account.Briefly explain how an increase in financial inclusion leads to the development of banks in India. No plagiarsed answers..
- When a foreign company engages in riskier behavior after it has received international investment funds, it is known as Part 2 A. adverse selection. B. portfolio investment. C. moral hazard. D. foreign direct investment.Question 4Every country, including Canada and the US, has used foreign borrowing to industrialize and develop its economy. These long-term loans are classified as foreign direct investment (FDI) and portfolio investment. Explain fully the difference between these two types of loans, including implications for risk and sovereignty. Provide examples of each type. Explain as fully as possible how short-term capital flows are different from long-term capital flows. Give examples of each. For your long-term examples try to use different examples, such as real estate, than those you provided for short-term capital flows.Which of the following is assocaited wtih FPI? A.) equity shares and loans B.) building a factory overseas C.) increased worker migration D.) loosening the money supply
- Q2. Identify any two joint venture companies from Oman and Write about the history (Company profile), functions, and common goals of these companies. How these companies are showing positive effect on the national economy of Oman?Are capital flow management and macroprudential measures the same thing?Q8. Economic models like the are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories. A. financial capital market B. circular flow diagram C. financial investment market D. Specialization Model