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Which feature most clearly distinguishes FPI from Foreign Direct Investment (FDI)?

FPI is more liquid and can be exited quickly because it is held in tradable securities, whereas FDI represents a long-term stake with control or significant influence. This is why FPI flows are volatile, while FDI is stable and typically brings technology and management skills.

  1. AFPI is generally more liquid and can be withdrawn quickly, while FDI reflects a longer-term stake with control or influenceCorrect
  2. BFPI always brings in technology and management expertise, while FDI does not
  3. CFPI is permitted only in unlisted companies, while FDI is permitted only in listed companies
  4. DFPI is made only by Indian residents, while FDI is made only by non-residents

Explanation

FPI is largely in tradable securities and can be sold fast, which makes it volatile, often called hot money. FDI involves a lasting interest and control, with technology and management inputs. The distractor reversing technology transfer is wrong because that is a typical FDI feature.

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