SSC Economics Sample Paper NCERT Sample Paper-6

  • question_answer
    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: A

    Solution :

    [a] 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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