International Finance And Treasury - Study Mode

[#431] The current account of balance of payments does not include
Correct Answer

(A) Trade in goods

Explanation

Solution: The current account of balance of payments does not include trade in goods. Trade in goods and services is defined as the transactions in goods and services between residents and non-residents. It is measured in million USD, as percentage of GDP for net trade, and also in annual growth for exports and imports.

[#432] The capital account of balance of payments represents
Correct Answer

(C) Investment made by the country s resident abroad, but not vice versa

Explanation

Solution: The capital account of balance of payments represents Investment made by the countries resident abroad, but not vice versa.

[#433] Country A imports gold worth USD 100 million for commercial purposes. The transaction will affect
Correct Answer

(D) Both current account and capital account

Explanation

Solution: Country A imports gold worth USD 100 million for commercial purposes. The transaction will affect both current account and capital account.

[#434] Money received for purchase of shares in Indian company by a foreign investor will be treated as foreign direct investment if
Correct Answer

(D) The shares are acquired other than through stock exchange

Explanation

Solution: Money received for purchase of shares in Indian company by a foreign investor will be treated as foreign direct investment if the shares are acquired other than through stock exchange. NRIs are also allowed to contribute to capital of Indian companies by investing in shares on Recognized Stock Exchanges under Portfolio Investment Route.

[#435] ADR/GDR can be issued
Correct Answer

(A) only by listed companies

Explanation

Solution: ADR/GDR can be issued only by listed companies. With the help of ADR, foreign companies can trade in US stock market, through various bank branches. On the other hand, GDR helps foreign companies to trade in any country's stock market other than the US stock market, through ODB's branches. ADR is issued in America while GDR is issued in Europe.