CFA Practice Question

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CFA Practice Question

If U.S. exports are $200, imports are $300, net income from foreign investments is $20, and net transfers from abroad are -$50, then the U.S. has a capital/financial account ______.

A. deficit of $100
B. surplus of $130
C. surplus of $50
Correct Answer: B

The current account plus the capital/financial account equals zero. The current account: 200 - 300 + 20 - 50 = -130.

User Contributed Comments 5

User Comment
nufan (200+20) - (300+50) = -130 for the current account

current account (-130) + capital account (130) = 0
nike a current-account deficit implies a capital-account surplus (and vice versa). The sum of current account and capital account (called overall balance), should be zero.
charlie1 net income from foreign investments does not belong to capital account. It's the interest income which belongs to current account.
HenryQ I think net income here means interest income. Here is from Wiki: The net factor income or income account, a sub-account of the current account, is usually presented under the headings income payments as outflows, and income receipts as inflows. Income refers not only to the money received from investments made abroad (note: investments are recorded in the capital account but income from investments is recorded in the current account) but also to the money sent by individuals working abroad, known as remittances, to their families back home.
DustinErik I'm calling this a deficit, not a surplus. Last time I checked, higher imports than exports = trade deficit.
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