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“Hot Money” refers to portfolio investment or short term capital investment under the Capital Account in the Balance of Payment. Short term capital investment generally refers to the purchase of stocks and bonds, as well as money deposits which are consider relatively liquid and stay in the country on a short term basis. This short term investment is also known as “hot money”. Hot money is unwarranted because of its short term nature that can cause great fluctuations in the local stock market. |
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