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With reference to foreign portfolio investments (FPI), consider the following statements:
1. FPIs are more volatile than loans from international financial institutions.
2. Foreign Direct Investments are part of FPIs.
Which of the statements given above is/are correct ?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'A'. Can you explain this answer?
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With reference to foreign portfolio investments (FPI), consider the fo...
Answer & Explanation: (a) 1 only.
FPI is also called Foreign institutional Investments ( FIIs). Because of their volatility they are also called hot money. Loans from international financial institutions are given for a fixed tenure and hence are stable. FDI is not part of FPI, but are accounted separately.
Most Upvoted Answer
With reference to foreign portfolio investments (FPI), consider the fo...
Explanation:
b) 2 only
Foreign portfolio investments (FPIs) refer to investments made by investors in financial assets such as stocks and bonds of foreign companies. Here is a detailed explanation for each statement provided:
b) Foreign Direct Investments are part of FPIs:
- Foreign Direct Investments (FDIs) and Foreign Portfolio Investments (FPIs) are two distinct forms of international investment. FDIs involve a long-term relationship between the investor and the company, with the investor having a significant degree of control over the management of the company.
- On the other hand, FPIs are more short-term investments where investors do not actively manage or control the companies in which they invest.
- Therefore, the statement that FDIs are part of FPIs is incorrect.
Therefore, the correct answer is option 'A' (1 only).
b) 2 only
Foreign portfolio investments (FPIs) refer to investments made by investors in financial assets such as stocks and bonds of foreign companies. Here is a detailed explanation for each statement provided:
b) Foreign Direct Investments are part of FPIs:
- Foreign Direct Investments (FDIs) and Foreign Portfolio Investments (FPIs) are two distinct forms of international investment. FDIs involve a long-term relationship between the investor and the company, with the investor having a significant degree of control over the management of the company.
- On the other hand, FPIs are more short-term investments where investors do not actively manage or control the companies in which they invest.
- Therefore, the statement that FDIs are part of FPIs is incorrect.
Therefore, the correct answer is option 'A' (1 only).
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With reference to foreign portfolio investments (FPI), consider the following statements:1. FPIs are more volatile than loans from international financial institutions.2. Foreign Direct Investments are part of FPIs.Which of the statements given above is/are correct ?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?
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