The instrument(s) used by foreign funds and investors who are not registered with SEBI but are interested in Indian Securities is/are

Collateralized debt obligations (CDOs) are a type of structured asset-backed security (ABS) with multiple "tranches" that are issued by special purpose entities and collateralized by debt obligations including bonds and loans. (Hence, option '1' is incorrect.) Participatory notes (PNs / P-Notes) are instruments used by investors or hedge funds that are not registered with the SEBI (Securities & Exchange Board of India) to invest in Indian securities. SEBI permitted FIIs to register and participate in the Indian stock market in 1992. Indian based brokerages buy Indian-based securities and then issue PNs to foreign investors. Any dividends or capital gains collected from the underlying securities go back to the investors. (Hence, option '2' is correct.) The term "pump priming" is derived from the operation of older pumps; a suction valve had to be primed with water so that the pump would function properly. With these pumps, pump priming assumes that the economy must be primed to function properly once again. In this regard, government spending is assumed to stimulate private spending, which in turn should lead to economic expansion. (Hence, option '3' is incorrect.) A credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a loan default or other credit event. (Hence, option '4' is incorrect.)