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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?
Verified Answer
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.
 
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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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