Economics · External Sector

With reference to Foreign Portfolio Investment (FPI), which of the following statements is correct?

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1It is recorded in the Capital Account of a country's Balance of Payments.✓
2Unlike FDI, FPI does not involve investment in financial assets like shares and bonds.
3It provides the investor with direct ownership and active control over the business operations.
4It is generally less risky and volatile than Foreign Direct Investment (FDI).

Correct answer

It is recorded in the Capital Account of a country's Balance of Payments.

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