CA Foundation P4 · Chapter 9 · Question 13 of 15
Foreign Direct Investment (FDI) is distinguished from Foreign Portfolio Investment (FPI) mainly because FDI:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Involves a lasting interest and a significant degree of control or influence over the enterprise
Explanation
FDI reflects a long-term interest and management influence, such as setting up a subsidiary or acquiring a substantial equity stake. FPI is investment in financial assets such as shares and bonds without control and is generally more volatile ('hot money').
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