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CS Professional · Strategic Management and Corporate Finance · Foreign Funding - Institutions

Which statement about the investment routes and instruments open to an FPI in India is correct?

An FPI may invest in listed equity, government securities and corporate bonds, within the prescribed limits. It can trade on exchanges, and it cannot freely buy unlisted equity or agricultural land, which fall outside the portfolio investment framework.

  1. AAn FPI may invest in listed shares, government securities and corporate bonds, subject to prescribed limitsCorrect
  2. BAn FPI may freely invest in unlisted equity of any company without restriction
  3. CAn FPI may invest only through the primary market and may not trade on exchanges
  4. DAn FPI may invest in agricultural land as a portfolio investment

Explanation

FPIs may invest in listed equity, government securities, corporate bonds, and units of certain funds, within limits. They trade on exchanges, and cannot invest in agricultural land, which is barred for foreign investors generally. Unlisted equity is not a free portfolio route.

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