Q. Consider the following statements regarding Foreign Portfolio Investment (FPI):
1. FPI has a shorter time frame for investment return.
2. Portfolio investment offers control over the business entity in which the investment is made.
Which of the statements given above is/are correct?
Foreign portfolio investment (FPI) refers to investing in the financial assets of a foreign country, such as stocks or bonds available on an exchange.
- This type of investment is at times viewed less favorably than direct investment because portfolio investments can be sold off quickly and are at times seen as short-term attempts to make money, rather than a long-term investment in the economy.
- Portfolio investment typically has a shorter time frame for investment return than direct investment.
- As with any equity investment, foreign portfolio investors usually expect to quickly realize a profit on their investments.
- Unlike direct investment, portfolio investment does not offer control over the business entity in which the investment is made.
Source: TMH Ramesh Singh