英文国际金融练习卷Chapter_2.doc

International FinanceAssignment Problems (2) Name: Student No.:I. Choose the correct answer for the following questions (only ONE correct answer) (5 credits for each question, total credits 4 x 15 = 60)1. According to the principle of the balanced balance of payments, if a country reduces its foreign exchange reserves by $20 million and the statistical discrepancy is in the credit entry of $5 million in a given period of time, the country runs _ of its balance of payments during that period of time. A. $15 million deficits B. $25 million deficits C. $20 million deficits D. $5 million deficits2. If a countrys domestic saving is greater than domestic investment, the country probably has _. A. a current account surplus B. a net capital outflow C. a current account deficit D. Both A and B are possible.3. A debit entry in the balance-of-payments account represents a transaction that _.A. a domestic resident receives a payment from abroadB. a domestic resident makes a payment to a foreign residentC. will improve the current account statusD. will have no affects on the nations foreign exchange reserves4. In terms of balance-of-payments account, which of the following would be recorded as a debit entry in the U.S. BOP?A. exports of merchandiseB. exports of servicesC. purchase of the U.S. Treasury bonds by non-residentsD. an increase of the deposit in a U.S. residents account at a foreign bank5. A balance-of-payments deficit is defined as a situation in which _.A. the value of payments made to the foreigners exceeds the value of receipts received from the foreigners in a given period of timeB. the government must borrow in order to meet its budget obligationsC.the value of manufactured good exports is less than the value of imported goodsD. a nation earns much in extra assets or reduced liabilities in its dealings with the rest of the world6. Which of the following would NOT be considered as a typical BOP transaction?A. Toyota USA is a US distributor of automobiles manufactured in Japan by its parent company. B. A U.S. subsidiary of European financial giant, Credit Suisse, pays dividends to its parent in Zurich. C. A US tourist purchases gifts at a museum in London. D. All are example of BOP transactions.7. The balance of payments is a statistical record which measures the total value of _. A. a countrys foreign exchange reserves in a certain period of time B. a countrys foreign trades between the residents of a country and its non-residents for a given period of time C. all economic and financial transactions between the residents of a country and its non-residents for a given period of time D. a countrys capital inflows and outflows at a particular date in a given year8. A British pension fund sells some of its holdings of the stocks of U.S. companies in order to buy U.S. corporate bonds. This transaction will affect _. A. the U.S. international investment position B. the British international investment position C. both countries international investment position D. None of the above. This is because both countries international investment position unchanged, only the composition of foreign investments in both U.S. and U.K. changes.9. Which of the following transactions is included in Chinas balance-of-payments account? A. A U.S. embassy in Beijing pays salaries to its American staffs. B. The World Bank furnishes the Chinese government with a loan. C. A U.S. student pays tuition fees for his 4 year-study in Beijing University. D. The Chinese embassy in Washington buys telecommunication equipments from a Chinese company in Shanghai.10. If the U.S. runs current account deficits, we can expect that _. A. it may act as a net debtor in the rest of the world B. its domestic saving may less than its domestic investment C. its domestic production is less than its domestic consumption D. all of the above11. The trade deficit means that _. A. residents are importing more goods than they are exporting B. residents are borrowing more funds than they are lending C. residents are receiving more payments than they are making D. residents are producing more goods than they are consuming12. Which of the following is an example of an exchange of financial assets? A. the exchange of butter for wheat B. the exchange of information technology C. the exchange of a fixed-rate loan for a floating-rate loan D. the exchange of gold for jewelry13. For most countries, the subcategory that typically dominates the current account is _. A. unilateral transfers B. goods trade C. income trade D. services trade14. When categorizing investments for the financial account component of the balance of payments the _ is an investment where the investor has no incentive to control whereas the _ is an investment where the investor wants to control over the assets. A. direct investment, portfolio investment B. direct investment, indirect investment C. portfolio investment, indirect investment D. portfolio investment, direct investment15. If a countrys merchandise exports exceed its imports by $50 million, services trade balance is net $30 million and unilateral transfers made in excess of those received by $5 million, what is the countrys current account balance? A. $85 million B. $75 million C. $15 million D. $25 millionII. Answer the following questions: (3 credits for each question, total credits 3 x 6 = 18)Questions 1 through 5 are based on the information of the selected items from country As balance of payments in 2010. Country As Balance of Payments, 2010 (millions of U.S. dollar) Goods export 719 Goods import 1,145 Service export 279 Service import 210 Income payments 269 Income receipts 284 Net unilateral transfers -49 Errors and omissions 111. Country As BOT is _.2. Country As current account balance is _.3. Suppose the changes in country As official reserves are zero in 2010, its capital and financial account balance MUST be _.4. If country As official reserves are recorded on the credit side by $10 million in 2010, its capital and financial account balance should be _.5. Based on the assumption of question 4, country A has BOP deficit or surplus in 2010? Explain.6. What is the current account balance of a nation with a government budget deficit of $128 billion, private saving of $806 billion, and domestic capital formation of $777 billion? III. Express the following operations in the Dutch balance of payments in T-accounts: (5 credits for each question, total credits 3 x 5 = 15)a. A Dutch company exports 100,000 goods to a London company for 100,000 in bank deposits.b. An import billed for 150,000 paid with a check drawn on a London bank.c. A Dutch company based in Rotterdam uses 1 million that it was holding in a short-term deposit with its Rotterdam bank to purchase 10-year bonds issued by German government.IV. True or false: (7 credits) A credit entry in the balance of payments represents a demand for local currency whereas a debit entry represents a supply of local currency. You MUST explain your answer.Answ