Which of the following refers to investment in a portfolio of foreign securities?

Which of the following refers to investment in a portfolio of foreign securities?

• A. Foreign Direct Investment (FDI)
• B. Foreign portfolio investment (FPI)
• C. Direct equity investment
• D. International venture capital

Answer: (B)

Foreign portfolio investment (FPI) refers to the practice of investing in a variety of foreign securities, such as stocks and bonds, with the goal of gaining returns from these financial assets. This type of investment is characterized by a lower level of involvement in the business operations of the companies in which one is investing. Investors in FPI intend to capitalize on market fluctuations and economic growth in foreign markets without seeking control or significant influence over those companies. FPI is typically contrasted with other investment forms, such as foreign direct investment (FDI), where an investor establishes a tangible business presence or acquires a substantial degree of influence in foreign enterprises. While direct equity investment relates to acquiring shares in a company's equity for control purposes, and international venture capital focuses on investing in startups and small businesses abroad with the intention of offering management support and funding, FPI remains purely financial and often more liquid, allowing for easier entry and exit from investments. Thus, B is the appropriate choice, as it accurately identifies the type of investment being described.

Foreign portfolio investment (FPI) refers to the practice of investing in a variety of foreign securities, such as stocks and bonds, with the goal of gaining returns from these financial assets. This type of investment is characterized by a lower level of involvement in the business operations of the companies in which one is investing. Investors in FPI intend to capitalize on market fluctuations and economic growth in foreign markets without seeking control or significant influence over those companies.

FPI is typically contrasted with other investment forms, such as foreign direct investment (FDI), where an investor establishes a tangible business presence or acquires a substantial degree of influence in foreign enterprises. While direct equity investment relates to acquiring shares in a company's equity for control purposes, and international venture capital focuses on investing in startups and small businesses abroad with the intention of offering management support and funding, FPI remains purely financial and often more liquid, allowing for easier entry and exit from investments. Thus, B is the appropriate choice, as it accurately identifies the type of investment being described.