Question

    Which among these is the most volatile Foreign Capital?

    A External Commercial Borrowings Correct Answer Incorrect Answer
    B Foreign Direct Investment Correct Answer Incorrect Answer
    C Loans from International Financial Institutions Correct Answer Incorrect Answer
    D Foreign Portfolio Investment Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Foreign portfolio investment (FPI) consists of securities and other financial assets held by investors in another country. It does not provide the investor with direct ownership of a company's assets and is relatively liquid depending on the volatility of the market. Along with foreign direct investment (FDI), FPI is one of the common ways to invest in an overseas economy. FDI and FPI are both important sources of funding for most economies.

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