CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

Which of the following is true?
A. All central bank transactions are excluded from balance of payment accounts.
B. All cash flows associated with foreign investments belong to the capital account.
C. Repatriation of domestic currency to a foreign country by foreign nationals living in the country is treated as part of the current account.
Explanation: A is false. Official assets are included in the financial account. B is false. Such cash flows belong to the financial account. However, income associated with investment is treated as part of the current account. C is a direct outflow of domestic currency and is treated as a debit entry on the current account.

User Contributed Comments 3

User Comment
Staf Assuming it is income
steved333 Wouldn't that mean that cash outflows for foreign investments would come from the financial acct?

Reread: it says ALL cashflows... so yeah, B's false.
octavianus C is investment income made in the US for example on US T-Bonds by a British investor. The coupon payments are transfered from the US to the UK. Investment income is part of Current Account.
You need to log in first to add your comment.