If a US Resident Purchases a Foreign Stock for $750

question 14

Multiple Choice

If a US resident purchases a foreign stock for $750 and pays for it by increasing foreign bank balances in the US,what entries would be made in the US balance of payments?

• A)Common stock - credit of $900; Cash - debit of $900
• B)Capital outflow - credit of $900; Capital inflow - debit of $900
• C)Common stock - debit of $900; Cash - credit of $900
• D)Capital outflow - debit of $900; Capital inflow - credit of $900

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Definitions:

Personal Insolvency

A financial condition where an individual is unable to meet their debt obligations as they come due.

Liquidation

The process of winding up a company's financial affairs by selling off its assets to pay creditors and distribute any remaining assets to the shareholders.