What are the effects of each of the following on the U.S. international investment position? Foreign central banks increase their official holdings of U.S. government securities. U.S. residents increase their holdings of stocks issued by Japanese companies. A British pension fund sells some of its holdings of the stocks of U.S. companies in order to buy U.S. corporate bonds. Question TWO 2. On December 31, a country has the following stocks of international assets and liabilities to foreigners. The country’s residents own $30 billion of bonds issued by foreign governments. The country’s central bank holds $20 billion of gold and $15 billion of foreign- currency assets as official reserve assets. Foreign firms have invested in production facilities in the country, with the value of their investments currently $40 billion. Residents of foreign countries own $25 billion of bonds issued by the country’s companies. What is the value of the country’s international investment position? Is the country an international creditor or debtor? If the country during the next year runs a surplus in its current account, what will the impact be on the value of the country’s international investment position? Please answer each with the corresponding numbers in order with a simple response to reach 2 sentences.
Question ONE
When foreign central banks increase their official holdings of U.S. government securities, the U.S. international investment position improves as it leads to a higher level of foreign ownership of U.S. assets.
If U.S. residents increase their holdings of stocks issued by Japanese companies, the U.S. international investment position deteriorates as this involves an increase in foreign ownership of U.S. assets.
When a British pension fund sells some U.S. stocks to buy U.S. corporate bonds, the effect on the U.S. international investment position depends on whether the value of the sold stocks is greater or lesser than the purchased bonds. If the bonds’ value is higher, the position improves; if lower, it deteriorates.
Question TWO:
The value of the country’s international investment position is the sum of its international assets minus its international liabilities, which amounts to $30 billion ($20 billion of gold + $15 billion of foreign currency + $40 billion of foreign firms’ investments – $25 billion of foreign-owned bonds). The country is an international creditor.
If the country runs a surplus in its current account next year, its international investment position would generally improve. A current account surplus indicates that the country is earning more from its exports and investments abroad than it’s paying for imports and foreign investments, leading to an increase in its net international assets.
As a renowned provider of the best writing services, we have selected unique features which we offer to our customers as their guarantees that will make your user experience stress-free.
Unlike other companies, our money-back guarantee ensures the safety of our customers' money. For whatever reason, the customer may request a refund; our support team assesses the ground on which the refund is requested and processes it instantly. However, our customers are lucky as they have the least chances to experience this as we are always prepared to serve you with the best.
Plagiarism is the worst academic offense that is highly punishable by all educational institutions. It's for this reason that Peachy Tutors does not condone any plagiarism. We use advanced plagiarism detection software that ensures there are no chances of similarity on your papers.
Sometimes your professor may be a little bit stubborn and needs some changes made on your paper, or you might need some customization done. All at your service, we will work on your revision till you are satisfied with the quality of work. All for Free!
We take our client's confidentiality as our highest priority; thus, we never share our client's information with third parties. Our company uses the standard encryption technology to store data and only uses trusted payment gateways.
Anytime you order your paper with us, be assured of the paper quality. Our tutors are highly skilled in researching and writing quality content that is relevant to the paper instructions and presented professionally. This makes us the best in the industry as our tutors can handle any type of paper despite its complexity.
Recent Comments