Match the following:

List -I	List -II
(A) Direct Investment	(I) Bilateral Loans
(B) Portfolio Investment	(II) Equity Capital
(C) External Borrowing	(III) Off Shore Funds
(D) External Assistance	(IV) Short Term Debt

Which of the following combination is a correct match of the above?

1. (A) - (I), (B) - (II), (C) - (IV), (D) - (III)
2. (A) - (I), (B) - (II), (C) - (III), (D) - (IV)
3. (A) - (II), (B) - (III), (C) - (IV), (D) - (I)
4. (A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Option 3: (A) - (II), (B) - (III), (C) - (IV), (D) - (I) -> Direct Investment involves establishing or acquiring equity stakes in enterprises for long-term business interests, hence matched with Equity Capital (II). Portfolio Investment refers to investing in financial securities without management control, typically through Offshore Funds (III). External Borrowing includes various forms of debt obligations from foreign sources, including Short Term Debt (IV). External Assistance comprises aid and concessional financing from governments and international organizations, primarily through Bilateral Loans (I). This combination correctly represents the nature and instruments of different capital flow categories in international finance. -> correct