about the question that asked about effects on current and financial a/c of high growth in a county…i got confused on this q as the book says high income growth causes depreciation of currency resulting in current a/c surplus, financial a/c deficit…but i also remember a question from cfai online sample exams that asked about effect of high economic growth results in appreaction in currency (which then results in current a/c deficit, financial a/c surplus as the country attracts more foreign investment due to high economic growth), as it was not specified in the question which growth it is referring to, economic or income, i assumed that its talking about economic growth and selected the answer that said it will result in current a/c deficit and financial a/c surplus…any one else who chose the same answer?
I said CA deficit based upon the same logic.
yeah me agree fully
I chose decrease in CA and increase in FA. I just assumed if growth was higher in US, we would import more goods, thus decreasing CA.
McLeod pass chances = 100%, I agree with both. McLeod81 Wrote: ------------------------------------------------------- > 2 and 4, borrow USD sell B fwd.
If you borrow in one country, don’t you have to sell the forward of the same currency so you can purchase it back later? I did bad on all of this!
buy fwd same currency - buying us forward means youve bought x usd at some point in the future
I put CA deficit and FA surplus… is this correct?
y
I think its deficit improves and Financial worsens. The answer as I recall it didnt state deficit/surplus… it was improve worsen and as per schweser higher growth leads to more M so dep currency and improving deficit.
For borrow USD. sell domestic forward, was this choice B? Last minute i realized i had screwd up the DC-FC concept … so just made a random guess. Anybody remembers if it was choice B or C?
anybody remembers if it B or C. I remember i put B, dont know what it was??