CSEET · Economic and Business Environment · Global Environment
Which of the following is a feature that distinguishes FDI from Foreign Portfolio Investment (FPI)?
FDI is typically long term and carries control or influence over the Indian enterprise, making it more stable. FPI is passive investment in securities aimed at financial returns and can be withdrawn quickly, so it is more volatile and gives no management control.
- AFDI is generally long term and linked to control or management involvement, whereas FPI is mainly in securities for financial returns and is more volatileCorrect
- BFDI is always short term, whereas FPI is always long term
- CFDI can be made only in government securities
- DFPI always gives the investor management control
Explanation
FDI reflects a lasting interest and often management involvement, making it stable. FPI is passive investment in securities, easily withdrawn, hence more volatile. The other options reverse or distort these features.
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