| 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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