UO+2113+QUICK+6+Foreign+Investment.pdf

UO+2113+QUICK+6+Foreign+Investment.pdf - QUICK REVIEW#6...

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THIS IS A DRAFT VERSION!!! Thank you for reporting mistakes and for suggesting improvements! This material is copyright © Lawrence Harris, 2017. QUICK REVIEW #6 FOREIGN INVESTMENT Prof. Lawrence Harris 1 Monday, October 30, 17
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QUICK REVIEW #6 Foreign Investment in Canada 2 Monday, October 30, 17
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Canada’s Capital Account While it is possible to find exceptions in certain time periods, Canada has historically had a surplus in its capital/financial account. This means that capital inflows are greater than capital outflows; we “export” more stocks, bonds and financial instruments than we “import”. Put another way, we are selling ownership in Canadian companies to foreigners at a much higher rate than we are acquiring ownership of foreign companies. New foreign investment in Canada has typically been greater than new Canadian investment abroad. 3 Monday, October 30, 17
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Definitions: Stocks vs. Bonds Stocks (shares, equity): Stockholders assume risk, share profit (dividends) — or loss — and have a say in how the company is run. Bonds: (debt, a loan to the company): Bondholders usually are sure to receive their interest payment; not connected to profit or loss of company. Bondholders are not usually entitled to vote or say how the company should be run.
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