Last year,$100million in outstanding bank loans to a developing nation\'s not re
ID: 1218138 • Letter: L
Question
Last year,$100million in outstanding bank loans to a developing nation's not renewed , and the developing nation's government paid off $50 million in maturing government bonds that had been held by foreign residents. During that year, however, a new group of banks participated in a $125 million loan to help finance a major government construction project in the capital city. Domestic firms also issued $50 million in bonds and $75 million in stocks to foreign investors. All of the stocks issued gave the foreign investors more than 10% shares of the domestic firms.
Explanation / Answer
Answer:
Gross Foreign Investment in the last year was?
The Gross Foreign Investment is the sum of maturing government bonds, bonds in domestic firms and stocks to foreign investors. This is would be express with following way. That is:
GFI = MGB + BDF + SFI
Maturing government bonds is: $50 million
Bonds in domestic firms is: $50 million
Stocks to foreign investors is: $75 million
GFI = $50 + $50 + $75
= $175 million
Therefore, the Gross Foreign Investment in the last year was: $175 million
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