Which of the following is the correct definition of Hot Money?

a. This is the fund which is dumped into a country to get the advantage of a favourable interest rate

b. This is the fund which is provided by a bank in US $ at very short notice and at a very high rate of interest and for a longer period of repayment

c. This is the fund which is pushed into market through illegal methods

d. None of the above

ANSWER: This is the fund which is dumped into a country to get the advantage of a favourable interest rate

Explanation:

It can move in and out of the market very quickly leading to market instability.