Exam (elaborations)
FIN4802 Assignment 2 2023 Suggested Solutions
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- University Of South Africa (Unisa)
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FIN4802 ASSIGNMENT 2 2023Unique Number: 206157
Due Date: 22 September 2023
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QUESTION 1
a) Analyse the concept of foreign capital investment flows, unpacking the different
types of foreign investment.
Foreign capital investment flows, often referred to simply as foreign investment or foreign
capital flows, represent the movement of capital between countries. These flows can take
various forms and play a crucial role in the global economy. Here, we will unpack the different
types of foreign investment:
Foreign Direct Investment (FDI):
• Definition: FDI involves the acquisition of a significant ownership stake in a business
or entity in a foreign country. It implies a long-term interest in managing the operations
of the foreign entity.
• Purpose: FDI is typically used to gain access to new markets, technology, resources,
or to establish a presence in a foreign country. It allows for managerial control and
influence over the invested company.
• Examples: A multinational corporation setting up a subsidiary in another country,
purchasing shares in a foreign firm, or building a new production facility overseas.
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