Foreign Reserves Are Used To

question 92

Multiple Choice

Foreign reserves are used to:

• A) help foreigners who need additional funds.
• B) provide military support to foreign operations, for example, the French legion and UN peacekeepers.
• C) cover foreign debt, import purchases, and other demands for foreign currency that banks might encounter.
• D) support foreign operations that are branches but not subsidiaries.

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Definitions:

Effective Yield

The total yield of a bond, taking into account annual interest payments and the bond’s price fluctuation.

Fair Value Option

An accounting choice that allows companies to report financial assets and liabilities at their fair values, with changes in fair value recognized through profit or loss.

Unrealized Holding

Unrealized holding refers to profits or losses on investments or assets that have increased or decreased in value but have not yet been sold or realized.

Bond Liability

Bond liability is the amount owed by a bond issuer to bondholders, including both the principal amount borrowed and any accrued interest, until the bond matures.