Multiple choice

Both Foreign Direct Investment (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. Which one of the following statements best Page 6 represents an important difference between the two?

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

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

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

  4. FII is considered to be more stable than FDI.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option 1 is wrong because it changes the roles of FII with FDI. Option 3 is wrong because while the FDI flows into the primary market, the FII flows into secondary market. Option 4 is wrong again because FDI is considered more stable than FII. Hence, option B is correct, because FII helps in increasing capital availability and FDI mostly sector specific.

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