Option 1 -> When central bank sells foreign exchange from its reserves, it's an official reserve sale.
Option 2 -> Portfolio investment refers to investment in foreign financial assets like stocks and bonds.
Option 3 -> Net invisibles represent trade balance in services like tourism, insurance, and banking.
Option 4 -> Net factor income is the difference between income earned by domestic factors abroad and foreign factors domestically.
Hence, Official reserve sale -> In a Balance of Payment deficit situation, there is excess demand for foreign currency. To stabilize the exchange rate and correct the deficit, the central bank intervenes by selling foreign exchange from its official reserves (foreign currency holdings). This transaction is officially termed as 'Official Reserve Sale' or 'Official Reserve Transaction' and is recorded in the official reserve account of the BOP. This helps meet the shortfall in foreign exchange and maintain external balance -> correct