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Which of the following statements are correct about the FDI and FII?
1. Foreign direct investment is involved in direct production activities and is a short-term investment
2. Foreign institutional investment is a long term investment in the financial market
1. Foreign direct investment is involved in direct production activities and is a short-term investment
2. Foreign institutional investment is a long term investment in the financial market
- a)Only 1 is correct
- b)Only 2 is correct
- c)Both 1 and 2 are correct
- d)Neither 1 nor 2 is correct
Correct answer is option 'D'. Can you explain this answer?
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Which of the following statements are correct about the FDI and FII?1....
Foreign investment refers to investments made by the residents of a country in the financial assets and production processes of another country. The effect of foreign investment, however, varies from country to country. It can affect the factor productivity of the recipient country and can also affect the balance of payments. Foreign investment provides a channel through which countries can gain access to foreign capital. It can come in two forms: foreign direct investment (FDI) and foreign institutional investment (FII).
Foreign direct investment involves in direct production activities and is also of a medium- to long-term nature. But foreign institutional investment is a short-term investment, mostly in the financial markets.
FII, given its short-term nature, can have bidirectional causation with the returns of other domestic financial markets such as money markets, stock markets, and foreign exchange markets. Hence, understanding the determinants of FII is very important for any emerging economy as FII exerts a larger impact on the domestic financial markets in the short run and a real impact in the long run. India, being a capital scarce country, has taken many measures to attract foreign investment since the beginning of reforms in 1991.
Foreign direct investment involves in direct production activities and is also of a medium- to long-term nature. But foreign institutional investment is a short-term investment, mostly in the financial markets.
FII, given its short-term nature, can have bidirectional causation with the returns of other domestic financial markets such as money markets, stock markets, and foreign exchange markets. Hence, understanding the determinants of FII is very important for any emerging economy as FII exerts a larger impact on the domestic financial markets in the short run and a real impact in the long run. India, being a capital scarce country, has taken many measures to attract foreign investment since the beginning of reforms in 1991.
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Which of the following statements are correct about the FDI and FII?1. Foreign direct investment is involved in direct production activities and is a short-term investment2. Foreign institutional investment is a long term investment in the financial marketa)Only 1 is correctb)Only 2 is correctc)Both 1 and 2 are correctd)Neither 1 nor 2 is correctCorrect answer is option 'D'. Can you explain this answer?
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Which of the following statements are correct about the FDI and FII?1. Foreign direct investment is involved in direct production activities and is a short-term investment2. Foreign institutional investment is a long term investment in the financial marketa)Only 1 is correctb)Only 2 is correctc)Both 1 and 2 are correctd)Neither 1 nor 2 is correctCorrect answer is option 'D'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Which of the following statements are correct about the FDI and FII?1. Foreign direct investment is involved in direct production activities and is a short-term investment2. Foreign institutional investment is a long term investment in the financial marketa)Only 1 is correctb)Only 2 is correctc)Both 1 and 2 are correctd)Neither 1 nor 2 is correctCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements are correct about the FDI and FII?1. Foreign direct investment is involved in direct production activities and is a short-term investment2. Foreign institutional investment is a long term investment in the financial marketa)Only 1 is correctb)Only 2 is correctc)Both 1 and 2 are correctd)Neither 1 nor 2 is correctCorrect answer is option 'D'. Can you explain this answer?.
Which of the following statements are correct about the FDI and FII?1. Foreign direct investment is involved in direct production activities and is a short-term investment2. Foreign institutional investment is a long term investment in the financial marketa)Only 1 is correctb)Only 2 is correctc)Both 1 and 2 are correctd)Neither 1 nor 2 is correctCorrect answer is option 'D'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Which of the following statements are correct about the FDI and FII?1. Foreign direct investment is involved in direct production activities and is a short-term investment2. Foreign institutional investment is a long term investment in the financial marketa)Only 1 is correctb)Only 2 is correctc)Both 1 and 2 are correctd)Neither 1 nor 2 is correctCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements are correct about the FDI and FII?1. Foreign direct investment is involved in direct production activities and is a short-term investment2. Foreign institutional investment is a long term investment in the financial marketa)Only 1 is correctb)Only 2 is correctc)Both 1 and 2 are correctd)Neither 1 nor 2 is correctCorrect answer is option 'D'. Can you explain this answer?.
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