Q. With reference to foreign investments in Indian security markets, consider the following statements:
1.Foreign Direct Investment (FDI) involves active ownership and flows primarily into the primary market.
2.Foreign Portfolio Investment (FPI) and Foreign Institutional Investors (FII) both bring short-term capital and operate in the secondary market.
3.FPI and FII investors are primarily eligible for company profits in the form of dividends, not capital gains.
Which of the statements given above is/are correct?
Answer: A
Notes:
Explanation:
- FDI implies active ownership and targets the primary market.
- FPI and FII provide short-term capital and are involved in secondary market
- FPI and FII investors are primarily eligible for capital gains, not just dividends. Dividends may be received, but capital appreciation is their main focus.
Source: Indian Economy (Ramesh Singh)
