On page 47 of the secret sauce: Under Monetary Policy during an expansion the current AND the financial account run a deficit? I thought the current account would run a surplus. Are they saying that both the current and financial account are in deficit and they are brought to zero by the official reserves??? That doesn’t seem right. Please help!
Bump.
Grind.
It’s correct. Current account deficit results due to economic growth, which means residents will want to import more than they export. Financial account deficit results due to low interest rates which make international investors not want to invest in your country.
OK what about pg 52 of secret sauce: Point #2 Shareholder’s equity is greater under the acquisition method. Since when? In the notes it says that equity and NI are the same under all 3 accounting methods.
Austin12, I had the same issue… but reasoned that Schweser is talking about Total Equity under acquisition (which includes the Minority Interest). There are two ways of showing minority interest, “above equity” or “below equity” … and in Schweser’s case (this year) they happen to clarify that MI is shown in the equity section… Last year they had MI “above” equity… so that’s why all 3 methods have same equity. That’s just my “guess”
Always see if item set says 100% ownership or some % less than that. If it’s not 100% the equity will always be higher due to NCI. Easy way to get you on a question involving ratios with equity in the denominator.
Austin12 Wrote: ------------------------------------------------------- > OK what about pg 52 of secret sauce: > > Point #2 > > Shareholder’s equity is greater under the > acquisition method. > > Since when? In the notes it says that equity and > NI are the same under all 3 accounting methods. This has come up about a billion times on the forum over the last week or so. Do a search on consolidation & equity and you will find one of them.
who cares about econ…for me ECON is A, B, C, A, B, C
Austin12 - “Errata” http://www.schweser.com/news/news_updates.php?new_level=cfa2&type=schweser Please consult.