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Chapter 18, Problem 19P
To determine

Foreign Portfolio Investment and role of asymmetric information in the investment

Concept introduction:

Foreign Portfolio Investment (FPI)- It is the foreign capital, in the shares and bonds (financial assets) of the invested entity, held passively by the foreign investors.

Foreign Direct Investment (FDI)- Investment of foreign capital in the business interest of another country for establishment of business operations or acquiring business assets. Unlike FPI, this form of capital investment implies ownership or controlling interest in the invested entity.

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