Foreign Portfolio Investment (FPI) is more likely than FDI to trigger a financial crisis in the host country because FPI:

CA Foundation · Business Economics · MTP · January 2026
Foreign Portfolio Investment (FPI) is more likely than FDI to trigger a financial crisis in the host country because FPI:
(A) A. Is associated with technology transfer
(B) B. Is driven by expectations and speculative capital movements
(C) C. Enhances domestic productive capacity
(D) D. Requires managerial control

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. Is driven by expectations and speculative capital movements

Topics: International Trade

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