Question

Analyse which of the following is an example of international exchange of capital.

• A. Suzuki, a Japanese company, bought Maruti Udhyog Limited, an Indian company.
• B. Suhani, an Indian, buys shares of Amazon, an USA-based company, from the US stock market.
• C. Sam, an American, sells his house to Michael, another American.
• D. Joseph, an Australian, buys land in New Zealand.

Answer 1

Answer: (A), (B), (D)

Joseph, an Australian, buys land in New Zealand.

The movement of capital between countries takes place through foreign investments. These include investments by foreign investors like Joseph buying land or building in another country or buying a domestic company like Maruti and buying shares of foreign companies. Sam selling his house to Michael is flow of capital within the same country. To ensure hassle-free and safe movement of capital from one country to another, a global financial system has been established.