A Resident of the U

question 234

Multiple Choice

A resident of the U.S. just purchased a share of stock on the London stock market. As far as the U.S. balance of payments this purchase will

• A)have no influence on the balance of payments since stock is not a good or service.
• B)be entered as a unilateral transfer in the current account.
• C)be entered in the capital account.
• D)require special drawing rights.

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Definitions:

Strike Price

The specified price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Stock Beta

A measure of a stock's volatility in relation to the overall market; reflects the risk associated with a specific stock.

Time to Maturity

The duration left until the final payment date of a financial instrument, critical for assessing its risk and return.

Exercise Value

The value of an option if it were exercised today; for call options, it is the current price of the underlying asset minus the strike price.