Which of the following is true?The component of the current account include direct foreign investment andportfolio investment.The transaction regarding an Australian consulting firm receiving AUD5 million(i.e., Australian 5 million dollars) for consulting services provided to a Germancompany is recorded as a debit under the current account of Australia.The transaction regarding a U.S. citizen receiving an interest payment as aresult of his investment in a bond of a British firm issued in the United Kingdomis recorded as a credit under the current account of U.S..When the BOP (balance of payment) accounts are recorded correctly, by BOPidentity, under purely floating exchange rate regime, BCA (balance of currentaccounts) + BKA (balance of capital accounts) = - BRA (Balance of official reserveaccounts).

A is incorrect. Direct foreign investment and portfolio investment are components of the capital…

Answered: Which of the following is true? The…

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

ChapterP3: Part 3: Exchange Rate Risk Management

Section: Chapter Questions

Problem 1Q

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