Very often we hear the terms 'Foreign Direct Investment' and 'Foreign Institutional Investment'. Which of the following statements is/are correct in relation to them?

1. FDI is an investment that a parent company makes in a foreign country. On the contrary, FII is an investment made by an investor in the market of a foreign nation.
2. FDI can enter the stock market easily and also withdraw from it easily, but FII cannot enter and exit that easily.
3. Foreign Direct Investment targets a specific enterprise. The FII provides for increasing capital availability in general.

Statement 1 is correct: FDI or Foreign Direct Investment is an investment that a parent company makes in a foreign country. On the contrary, FII or Foreign Institutional Investor is an investment made by an investor in the market of a foreign nation. Statement 2 is incorrect: In FII, the companies only need to get registered in the stock exchange to make investments. Foreign Institutional Investment is also known as hot money as the investors have the liberty to sell it and take it back. But in Foreign Direct Investment, this is not possible. In simple words, FII can enter the stock market easily and also withdraw from it easily. Statement 3 is correct: Foreign Direct Investment only targets a specific enterprise. It aims to increase the enterprises capacity or productivity or change its management control. In an FDI, the capital inflow is translated into additional production. The FII investment flows only into the secondary market. It helps in increasing capital availability in general rather than enhancing the capital of a specific enterprise.