Last year, $\backslash (100$million in outstanding bank loans to a developing nation's government were not renewed, and the developing nation's government paid off $\backslash )50$million in maturing government bonds that had been held by foreign residents. During that year, however, a new group of banks participated in a $\backslash (125$million loan to help finance a major government construction project in the capital city. Domestic firms also issued $\backslash )50$million in bonds and $\$75$million in stocks to foreign investors. All of the stocks issued gave the foreign investors more than $10$percent shares of the domestic firms.

a. What was gross foreign investment in this nation last year?

b. What was net foreign investment in this nation last year?

Overseas investment means the money pouring of one country to another, with international firms steadily gaining ownership stakes in domestic firms and assets. Overseas money means when foreigners have an active role in performance as a means of its participation or a big enough equity role in the company to impact strategy. International is a trend lately, with global firms investing in various of locations.

The amount of outstanding loan within the tip of last year$\$100$ million out of which the nation's government paid off$\$50$ million and$\$75$ million in stocks to foreign investors.

(a) Gross foreign investmentis that the sum of maturing government bonds, bonds in domestic firms, and stocks to foreign investors.
Calculate the gross foreign investment as follows:

$\left(\begin{array}{c}\text{Gross foreign}\\ \text{investment}\end{array}\right)=\left(\begin{array}{c}\text{Maturing}\\ \text{government}\\ \text{bonds}\end{array}\right)+\left(\begin{array}{c}\text{Bonds in}\\ \text{domestic}\\ \text{firms}\end{array}\right)+\left(\begin{array}{c}\text{Stocks to}\\ \text{foreign}\\ \text{investors}\end{array}\right)+(\text{Loan by bank}{)}^{}$

$=\mathrm{\$}50\text{million}+\mathrm{\$}75\text{million}+\mathrm{\$}50\text{million}+\mathrm{\$}125$

role="math" localid="1652103817920" $=\$300million$

Thus, the gross foreign investment is $\$300$million

Net foreign investmentis that the sum of maturing government bonds and bonds in domestic firms. Amount spent by foreign investors for manufacturing or construction purposes are foreign investments and amount spent by foreign nations or investors on bonds etc. are portfolio investments.
Calculate the online foreign investment as follows:

$\text{Net foreign investment}=\mathrm{\$}300\text{million}-\mathrm{\$}50\text{million}$

$=\$250$

Thus, the net foreign investment is$\$250$ million