The Accompanying Table Contains Hypothetical Data for the U

question 143

Multiple Choice

$$\begin{array} { | l | r | } \hline \text { U.S. goods exports } & + \$ 390 \\\hline \text { U.S. goods imports } & - 498 \\\hline \text { U.S. service exports } & + 133 \\\hline \text { U.S. service imports } & - 107 \\\hline \text { Net investment income } & + 12 \\\hline \text { Net transfers } & - 22 \\\hline \text { Capital account } & - 5 \\\hline \text { Foreign purchases of U.S. assets } & + 156 \\\hline \text { U.S. purchases of foreign assets } & - 59 \\\hline\end{array}$$ The accompanying table contains hypothetical data for the U.S. balance of payments in a year. All ?gures are in billions of dollars. What does the ?gure for net investment income indicate?

• A) Americans invested more abroad than the amount foreigners invested in the U.S.
• B) the size of the net in?ow of foreign investment to the United States in that year
• C) the net amount Americans received as interest and dividends on existing American investments abroad
• D) the net amount Americans paid as interest and dividends on existing foreign investments in the United States

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Definitions:

Annual Cash flows

The total amount of money being transferred in and out of a business over the course of a year.

Expected NPV

The anticipated net present value of an investment, considering various future scenarios and their probabilities.

Cost of Capital

The minimum expected return necessary to attract investors to provide capital for a project or investment.

Certainty Equivalent Approach

A method used to evaluate investment opportunities under conditions of uncertainty, adjusting future cash flows to present value as if they were certain.