n NISM Certifications
XV NISM Series XV
Medium

When a foreign investor invests in the existing financial instruments of a country, it is known as ______.

Practice question from NISM XV Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Foreign Financial Participation

  2. B

    Foreign Direct Investment

  3. Foreign Portfolio Investment

    Correct answer

  4. D

    Foreign Aid

Why this is the answer

FPI is passive investment in existing stocks or bonds without management control. FDI involves active participation in business operations, while FPI only buys financial instruments for returns.

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