Which of the following is true?The component of the current account include direct foreign investment andportfolio investment.The transaction regarding an Australian consulting firm receiving AUD5 million(i.e., Australian 5 million dollars) for consulting services provided to a Germancompany is recorded as a debit under the current account of Australia.The transaction regarding a U.S. citizen receiving an interest payment as aresult of his investment in a bond of a British firm issued in the United Kingdomis recorded as a credit under the current account of U.S..When the BOP (balance of payment) accounts are recorded correctly, by BOPidentity, under purely floating exchange rate regime, BCA (balance of currentaccounts) + BKA (balance of capital accounts) = - BRA (Balance of official reserveaccounts).

A is incorrect. Direct foreign investment and portfolio investment are components of the capital…

Answered: Which of the following is true? The…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

If US residents receive income from their foreign investments, it is counted on the US balance of payment account as: O A. Debit in the U.S. capital account. O B. Debit in the U.S. financial account. C. Credit in the U.S. financial account. D. Credit in the U.S. current account.
ABC Corp., a US corporation, purchased goods on credit from a British company on April 8, 2007. ABC made a payment of 10,000FC on May 8, 2007. The exchange rate was $1= FC .50 on April 8 and $1= FC .60 on May 8. What amount of foreign exchange gain or loss should be recognized on May 8 ?
How could the acquisition of a Moldovan company by a US company for 5 million dollars in 2018 and annual profits from the US investment in Moldova at 145.000 $ in 2019 be recorded in the balance payments in Moldova and the USA in 2018 and 2019 ?
Find the income tax expense 2019:
Identify each transaction by whether it belongs in the US current account or financial account: The central bank of China collects interest payments on US government securities that it had previously bought. O Financial Account O Current Account
Which of the following items is a "debit" item in a country's balance-of payments accounts? a. exports of services b. increased holdings of domestic bonds by foreigners c. exports of merchandise d. an increase in a domestic citizen's bank aaccount in a foreign bank
Companies conducting business outside their country's borders are required to translate the results of its foreign subsidiaries into their home currency so those results can be combined into their financial reporting domestically. What are three general steps to the foreign translation process
You are given the exchange rate between the U.S. dollar and the Canadian dollar. You are also given the exchange rate between the U.S. dollar and the Mexican peso. What is the name given to the Canadian dollar per Mexican peso exchange rate derived from the information that was provided? A. Swap rate B. Depositary rate C. Forward rate D. London Interbank rate E. Cross-rate
1.
On April 1, 2020, Shannon Company, a U.S. company, borrowed 100,000 euros from a foreign bank by signing an interest-bearing note due April 1, 2021. The dollar value of the loan was as follows: Date April 1, 2020 December 31, Amount $ 97,000 103,000 105,000 How much foreign exchange gain or loss should be included in Shannon's 2021 income statement? 2020 April 1, 2021 How much foreign exchange gain or loss should be included in Shannon's 2021 income statement? Multiple Choice $2,000 loss. $1,000 loss. O $1,000 gain, $8.000 loss. $2,000 gain.
Assume that a U.S. company has a foreign subsidiary whose functional currency is the U.S. dollar. Explain how exchange rates between the foreign currency and the dollar would have to change in order to result in a current-year remeasurement loss and how the company could use a foreign currency loan receivable or payable to hedge against its net investment in the foreign subsidiary.
For each of the following transactions, determine which U.S balance of payments account is credited and which is debited and by how much. Assume payments for all transactions are deposited into a U.S dollar-denominated bank account. Calculate for c and d.

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