Correct Option
Foreign Direct Investment (FDI) involves long-term investment in specific enterprises or sectors, often leading to ownership control, transfer of technology, and participation in management. Foreign Institutional Investor (FII) refers to portfolio investment in capital markets (e.g., stocks and bonds) without seeking management control. FII primarily aims at increasing general capital availability, whereas FDI targets specific productive assets or sectors. Thus, option (B) accurately represents this fundamental distinction.
Incorrect Options
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Option (A): This statement is incorrect. FDI is typically associated with bringing management skills and technology, in addition to capital. FII primarily involves portfolio investment in financial assets and does not generally contribute to management expertise or technology transfer.
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Option (C): This statement is incorrect. FDI can flow into both primary (e.g., greenfield investments, new projects) and secondary markets (e.g., acquisition of existing companies). FII predominantly targets the secondary market by investing in existing stocks and bonds.
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Option (D): This statement is incorrect. FII is generally considered more volatile and short-term due to its nature as portfolio investment, which can be withdrawn rapidly based on market conditions. FDI, being a direct investment in productive assets, is typically long-term and more stable.