(d) (ii) only
Explanation:
FDI
• It is only in equity/shares/ownership.
• It is through primary market.
• Generally new shares are issued and the new capital (money) comes to the company through which the company invests in new factory, machines etc.
• The foreign investors purchase large shareholding and appoints Board of Directors and get involved in the decision making (active management) of the company.
• Foreign investors try to make the company profitable through their decision making and target the profit of the company.
• It is sector specific. For example, a steel company in US will invest only in a steel company in India and try to make that company profitable through their management and decision making and get a share of the profit.
• It is a long-term investment as to turn the company profitable, the foreign investor needs to get invested for a long time.
• Generally, the government specify a lock in period and during this period the foreign investor cannot sell his investment and hence it is quite stable.
FPI/FII
• It is both in equity and debt (loan).
• Generally, through secondary market but can happen through primary market.
• Generally, only the owners change hands and new capital does not come to the company.
• Foreign investors generally purchase small shareholdings and do not get involved in the management of the company.
• Foreign investors target the share price of the company and derive their gain from rise of share prices.
• It is in general capital market. For example, a foreign investor is not particular about any company/ sector in India and is willing to invest in any company which gives a chance of share price appreciation.
• It is generally short-term investment.
• There is no lock in period and the foreign investor can return any time by selling his investment. This makes the currency volatile.

(d) All of the above
Explanation:
• When companies (govt. or private) borrow from abroad then it is called External Commercial Borrowing (ECB). ECB can be denominated in ‘foreign currency’ or it can be denominated in ‘rupee’ also which are called ‘masala bonds’.
• Even if masala bonds are denominated in ‘Rupee’, the money that we fetch from abroad is in dollars (or foreign currency). “Denominated in rupee” means…. the Indian company will issue the bond paper to the foreign investor where it will be written “Rs. 100 bond”. But the Indian company will get dollars equivalent of Rs. 100 (say $1.5). This is because Indian currency is not acceptable everywhere so the foreign investors hold dollars and give us dollars. So, at the end of the day, Indian company got dollars and when they bring it to India, it gets converted with RBI (through forex market) and RBI gets the dollars and the Indian company gets the rupee equivalent of dollars. This is a capital account transaction under BoP (as it is a borrowing) and increases our forex reserves, which can be used if India is having deficit in its Current Account. So, basically ‘Masala Bonds’ help in financing CAD of India. Masala bonds are a kind of ECB and ECB is basically a debt on India (but it’s not debt on Govt. of India).
• These Masala Bonds are listed abroad. But now we have “Indian Financial Services Centre” (IFSC) in GIFT CITY SEZ which is a deemed foreign territory and foreign securities can be listed here. So, earlier to list Masala bonds we had to go to say “London Stock Exchange” but now it can be done/listed in GIFT City IFSC and money will be invested by foreign investors.

(c) Both (i) & (ii)
Explanation:
• The term “Strategic Disinvestment” means the sale of substantial portion of the Government share-holding of a central public sector enterprise (CPSE) of up to 50%, or such higher percentage (to the strategic partner) along with transfer of management control.
• In Strategic Disinvestment, management control must be transferred to the private strategic partner. Strategic disinvestment is a way of privatization.

(d) (i) & (iii) only
Explanation:
• Masala bonds are issued outside India and money is raised in foreign currency, so it is part of our capital account. When NRIs are depositing money in Indian banks then it’s a transaction between Indian residents (banks) and non-resident Indians and it creates a liability on Indian banks for future, hence it’s a capital receipt.
• Import of capital equipments are part of current account.

(c) Both (i) & (ii)
Explanation:
A currency swap is an agreement in which the two parties (multinational corporations/governments) exchange the principle amount of a loan (and the interest) in one currency for the principle and interest in another currency. At thestart of the swap, the equivalent principle amounts are exchanged at the prevailing rate.
• At the end of the swap period, the principle amounts are swapped back at either the prevailing rate or at a pre-agreed rate such as the rate of the original exchange of principle amount.
• Currency swaps are used to obtain foreign currency loans at a better interest rate or as a method of hedging transaction risk on foreign currency loans.
• Currency swap agreements can be at the government and the company level both.