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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.
[2013]
  • a)
    1, 2 and 3
  • b)
    1, 2 and 4
  • c)
    2, 3 and 4
  • d)
    1, 3 and 4
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Which of the following constitute Capital Account?1. Foreign Loans2. F...
Capital Account includes Foreign Loans, Foreign Direct Investment, and Portfolio Investment. Private Remittances come under Current Account. Therefore, the correct answer is option 'B': 1, 2, and 4.

Capital Account:
Foreign Loans:
Foreign Loans refer to the borrowing of funds by a country from foreign sources. These loans can be in the form of commercial loans, government-to-government loans, or loans from international financial organizations like the World Bank, IMF, etc.

Foreign Direct Investment:
Foreign Direct Investment (FDI) means investing in a foreign country by a company or an individual. It involves establishing a new business or acquiring an existing one in the foreign country.

Portfolio Investment:
Portfolio Investment refers to investments made in the financial markets of a foreign country. For instance, buying stocks, bonds, or other securities issued by companies in a foreign country.

Private Remittances:
Private Remittances are the funds transferred by individuals living in a foreign country to their home country. These funds are sent to support their families or for investment purposes. Private Remittances come under the Current Account.

In conclusion, Foreign Loans, Foreign Direct Investment, and Portfolio Investment constitute the Capital Account, while Private Remittances come under the Current Account.
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Community Answer
Which of the following constitute Capital Account?1. Foreign Loans2. F...
Capital Account comprises of Foreign loans, Foreign Direct Investment and Portfolio Investment. Capital Account is the net result of public and private international investments flowing in and out of a country. Portfolio investment is the buying of shares and bonds. FDI is the investments by foreigners in a country or the citizens investing in foreign countries.
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Which of the following constitute Capital Account?1. Foreign Loans2. Foreign Direct Investment3. Private Remittances4. Portfolio InvestmentSelect the correct answer using the codes given below.[2013]a)1, 2 and 3b)1, 2 and 4c)2, 3 and 4d)1, 3 and 4Correct answer is option 'B'. Can you explain this answer?
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