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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.
Q. 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?
Verified Answer
With reference to foreign portfolio investments (FPI), consider the fo...
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.
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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.Q. 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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