Which of the following constitute Capital Account? 1. Foreign Loans 2. Foreign Direct Investment 3. Private Remittances 4. Portfolio Investment Select the correct answer using the codes given below.

1. The Balance of Payments (BoP) has two main accounts: the Current Account and the Capital Account (or, under newer classifications, the Capital Account and the Financial Account). The question likely refers to the broader concept encompassing financial transactions. 2. The Capital Account (and Financial Account) records transactions involving the purchase and sale of assets, such as loans and investments, between residents and non-residents. 3. Foreign Loans (1) represent borrowing from or lending to foreign entities. These are capital transactions and are part of the Capital Account (or Financial Account). 4. Foreign Direct Investment (FDI) (2) involves acquiring a lasting interest in an enterprise operating in another economy. This is a major component of the Financial Account (often grouped under the Capital Account). 5. Private Remittances (3) are transfers of money by foreign workers to their home country. These are considered unilateral transfers and are recorded under the Current Account, not the Capital Account. 6. Portfolio Investment (4) includes transactions in equity securities (stocks) and debt securities (bonds) that do not result in a lasting interest or control. This is another significant component of the Financial Account (often grouped under the Capital Account). 7. Therefore, Foreign Loans, Foreign Direct Investment, and Portfolio Investment constitute the Capital Account (or more accurately, the Financial Account component often discussed alongside the Capital Account in BoP).