Investment activity

Answer the following questions:

1. 
   What is investment?
   
2. 
   How is investment connected with the economy?
   
3. 
   How many channels are there for international investment and
   what are they?
   
4. 
   What is FDI?
   
5. 
   What is foreign indirect investment?
   
6. 
   Who are individual investors?
   
7. 
   Who are institutional investors? " ■ ■•
   

TYPES OF INVESTMENTS

Real investments are mainly long-term placements of funds (capi­tal) directly in the production or consumed goods. They represent fi­nancial placements in a concrete, usually long-term project and are usually connected with the purchase of real assets. In this process a bank credit can be used. In this case the bank also becomes an inves­tor carrying out real investments.

Portfolio investments are placement of capital in projects con­nected, for example, with the formation of portfolio and purchase of securities and other assets. In this case the main goal of the investor is formation and management of optimum investment portfolio carrying out by means of buying or selling securities at the stock market.

Real investments are sometimes called direct investments as they directly participate in the process of production (for example, invest­ment of funds in the buildings, equipment, commodities).

Placements in the financial assets, for example, purchase of shares, stocks, other securities are called financial investments. There are also intellectual and intangible investments — these are expendi­tures on the purchase of patents, licenses, know-how, training and re­training of the personnel, placements in scientific researches, etc.

Expenditures (irrespective of the sources of their financing) aimed at compensation of consumed means, enlarging and re-equipping of enterprises are considered to be long-term investments. They can be carried out in the following forms: construction of new, reconstruc­tion, enlarging and technical re-equipping of acting enterprises, pur­chases of pieces of land, purchase and creation of intangible assets.

An individual or a legal person investing funds and buying securi­ties on his own behalf and at his own expenses is called an investor. As an investor can act both — a government or an entrepreneur.

1. What are real investments?

2 What are portfolio investments?

3. 
   Why are real investments called direct investments?
   
4. 
   What placements are called financial investments?
   
5. 
   What expenditures are considered long-term investments?
   
6. 
   Who can act as an investor?