Identify where each of the following transactions would be entered in the balance-of- payments accounts.
a) A European managed investment fund buys some of the shares offered in Wysinco’s initial public offering (IPO) of shares on the stock market. [2 points]

b) The Caribbean Cement Company in Jamaica exports bulk cement to the Bahamas. [2 points]
c) The locally-owned Sandals hotel chair builds a new hotel in Dominica. [2 points]
For any one of the above,
d) show how the transaction would affect the market for foreign exchange (in the short run) and state whether the real exchange rate should rise or fall as a result.

Answer rating: 100% (QA)

Solutions a Financial Account This involves international transactions for assets Assets could be in the form Bonds Treasury Bills BFIs Deposit invest... View the full answer