Both Foreign Direct Investment (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. Which one of the following statements best represents an important difference between the two?

FII helps bring better management skills and technology, while FDI only brings in capital

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FII helps in increasing capital availability in general, while FDI only targets specific sectors

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FDI flows only into the secondary market, while FII targets primary market

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FII is considered to be more stable than FDI

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Solution

The correct option is B FII helps in increasing capital availability in general, while FDI only targets specific sectors
FDI helps bring better management skills and technology, while FII only brings in capital.

FII flows only into the secondary market, while FDI can target primary market.

FDI is considered to be more stable than FII.

FII helps in increasing capital availability in the economy in general, while FDI targets specific sectors with definite limits on investment.

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Similar questions

14. Consider the following statements,
1] Foreign direct investment (FDI) is an investment in a business by an investor from another country for which the foreign investor has control over the company purchased.

2] A foreign institutional investor (FII) is an investor or investment fund registered in a country outside of the one in which it is investing. Institutional investors most notably include hedge funds, insurance companies, pension funds and mutual funds.

Which of the above statements is/are correct?

Q. 'FDI is an investment which a parent company makes in a foreign country. Where as FII is an investment made by an investor in the market of a foreign country'. State whether the statement is true or false.

Q. Which of the following statements shows the difference between foreign direct investment (FDI) and capital market?

Q. Which of the following agencies/bodies has asked all foreign funds to come forward and register themselves as Foreign Institutional Investors (FIIs) prior to any investment in India?

Q. The Cabinet Committee on Economic Affairs (CCEA) has approved the proposal to increase foreign investment limit (subject to the aggregate foreign institutional investors’ (FIIs) shareholding cap) to 74% for which of the following private banks in July, 2016?

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