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    Question

    Which of the following BEST describes the difference between Foreign Portfolio Investors (FPIs) and Foreign Direct Investors (FDIs)?

    A FPIs hold majority stakes in companies, while FDIs have minority interests. Correct Answer Incorrect Answer
    B FPIs invest in readily tradable securities like stocks, while FDIs focus on long-term projects. Correct Answer Incorrect Answer
    C FPIs aim for short-term capital gains, while FDIs prioritize economic development in the host country. Correct Answer Incorrect Answer
    D FPIs are individuals, while FDIs are always corporations. Correct Answer Incorrect Answer
    E There is no real difference; both terms refer to the same type of investor. Correct Answer Incorrect Answer

    Solution

    FPIs are primarily interested in generating quick returns through buying and selling financial instruments like stocks, bonds, and derivatives. They don't seek control over companies. FDIs, on the other hand, invest directly in businesses by establishing or acquiring subsidiaries in a foreign country. They aim for long-term growth and integration within the host economy.

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