Question

An investment which involves the purchase of physical assets or a significant amount of ownership/stock in a company in another country, in order to gain a measure of management control, is called ____________.

Hint:

Think of a foreign company buying a controlling stake or setting up a factory in another country.

Answer 1

Step 1: Read the clues in the sentence:
The investment involves buying physical assets or a large share of ownership in a company.
The company is in another country.
The aim is to gain some control over the management of that company.

Step 2: Name the term:
An investment made by a company or person of one country into business assets or controlling stock in another country is called Foreign Direct Investment (FDI).
The word direct shows that the investor takes a hands-on role in running the business, unlike a passive holding of shares.

Step 3: Give an example:
A foreign car maker sets up a factory in India or buys a large stake in an Indian company.
It owns the plant and takes part in management decisions. This is FDI.

Step 4: Compare with a similar term:
Foreign Portfolio Investment (FPI) means buying only small amounts of shares or bonds in a foreign market.
It gives no management control, so it does not match the clue in the question.

Final Answer:
The blank is filled by Foreign Direct Investment (FDI).