Which of the Following Statements Is Incorrect with Respect to the Balance

question 33

Multiple Choice

Which of the following statements is incorrect with respect to the balance of payments?

• A)It constitutes a record of transactions between residents within one country.
• B)It consists of a current account, a capital account, and an account to record omissions and errors.
• C)Transactions that result in a demand for domestic currency are always entered as a credit.
• D)It must balance in the aggregate, but separate accounts can show deficits or surpluses.
• E)It constitutes a record of a country's trade in goods and services and financial assets.

---

Definitions:

Compound Return

The rate at which an investment grows over time, taking into account the effect of compounding.

Holding Period Return

The total return received from holding an asset or portfolio of assets over a period of time, typically expressed as a percentage.

Capital Gain Yield

Capital gain yield refers to the price appreciation component of the total return on an investment, expressed as a percentage increase from the asset's purchase price.

Dividend Yield

A financial index that reveals the proportion of yearly dividends paid out by a company to its stock price.