Question

    Which of the following is also known as ‘hot

    money’?
    A FDI Correct Answer Incorrect Answer
    B FPI Correct Answer Incorrect Answer
    C PPP investment Correct Answer Incorrect Answer
    D Investment by Government Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    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 It can be withdrawn anytime by the investor thus causing volatility in market.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.

    Practice Next