Question
Which of the following is also known as ‘hot
money’?Solution
Foreign Portfolio Investment (FPI) is known as ‘hot money’ due to its temporary nature. It can be withdrawn anytime by the investor thus causing volatility in market. FPI are held by foreign investors for a short time. It does not give them direct ownership of financial asset. FPI includes Foreign Institutional Investment (FII), Qualified Foreign Investors (QFI) etc.
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