What does portfolio investment refer to in the context of international business?

Portfolio investment in the context of international business refers to the purchase of stocks, bonds, or other financial assets in a foreign country without seeking control over the businesses in which these investments are made. It is primarily focused on the acquisition of financial assets rather than direct ownership or control over actual operational businesses, which aligns with the definition provided.

The notion behind portfolio investment is to diversify financial holdings and potentially gain returns from foreign markets. This is distinct from foreign direct investment, which involves the establishment or acquisition of tangible businesses and operations abroad. In portfolio investments, the investor maintains a level of separation from the management of the businesses being invested in, focusing instead on financial returns.

The other choices represent different concepts. The development of new businesses in foreign markets specifically refers to foreign direct investment rather than portfolio investment. The exchange of currency relates to foreign exchange markets and does not pertain directly to investments. Lastly, the establishment of new trade agreements deals with international relations and trade policies, which do not specifically fall under the category of portfolio investment.