problem 1: Security purchases in the United States by foreigners are:

a) Credit item in the current account.
b) Debit item in the financial account.
c) Credit item in the financial account.
d) Debit item in the current account.

problem 2: Merchandise exports minus imports equivalent the:

a) Basic balance.
b) Liquidity balance.
c) Official settlements balance.
d) Balance of trade.

problem 3: The payment of dividend by an American company to the foreign stockholder represents:

a) Debit in the U.S. financial account.
b) Credit in the U.S. current account.
c) Credit in the U.S. official reserve account.
d) Debit in the U.S. current account.

problem 4: According to the National Income Accounting Identity, the current account is equivalent to:

a) S-I
b) C+I+G+X
c) I+X
d) T-G

problem 5: If the bank is selling Euros for $0.89, then what is the implied euro price of the dollar?

a) 2.0
b) 1.999
c) 2.323
d) 1.123

problem 6: Assume that in London £/$ = 0.5 while in New York £/SF =0.2. The corresponding cross rate (SF/$) is:

a) 2.5.
b) 0.1.
c) 0.4.
d) 0.3.

problem 7: Riskless transactions to take benefit of profit opportunities due to a price differential or a yield differential in surplus of transaction costs are termed as:

a) Differential actions.
b) Cash transactions.
c) Arbitrage.
d) Forward transactions.

problem 8: The difference between bid (buying) rates and asks (selling) rates are termed as:

a) Profit.
b) Arbitrage.
c) Spread.
d) Forward transaction.