CIMA Exam CIMAPRA17-BA1-1 Topic 1 Question 78 Discussion

Actual exam question for CIMA's CIMAPRA17-BA1-1 exam

Question #: 78
Topic #: 1

All other things remaining equal, which of the following would encourage a speculative short-term capital flow into a country's currency?

AA fall in the country's interest rates

BAn expected depreciation of the country's exchange rate

CThe abolition by the country of previously-imposed exchange controls which deterred inward investment

DForeign-based multinational companies locating new factories in the country

Show Suggested Answer

Suggested Answer: C

by Johnna at Dec 11, 2023, 12:45 AM

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Luther

1 months ago

If you really want to encourage speculative capital, just start a rumor about aliens landing and offer to sell them the country. Instant currency boom!

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Corinne

3 days ago

C) The abolition by the country of previously-imposed exchange controls which deterred inward investment

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Christiane

5 days ago

C) The abolition by the country of previously-imposed exchange controls which deterred inward investment

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Ashton

7 days ago

B) An expected depreciation of the country's exchange rate

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Amira

12 days ago

B) An expected depreciation of the country's exchange rate

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Jacqueline

17 days ago

A) A fall in the country's interest rates

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Alyssa

20 days ago

A) A fall in the country's interest rates

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Holley

2 months ago

Multinational companies setting up factories? That's long-term investment, not the kind of speculative flow they're asking about. C is the clear winner.

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Jess

11 days ago

B) An expected depreciation of the country's exchange rate

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Hoa

12 days ago

A) A fall in the country's interest rates

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Raina

21 days ago

C) The abolition by the country of previously-imposed exchange controls which deterred inward investment

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Levi

2 months ago

Exchange rate depreciation? That's just a recipe for a currency crisis. C is definitely the way to go.

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Emmanuel

13 days ago

I see your point. It's all about creating a more open and attractive investment environment.

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Paris

1 months ago

True, but removing exchange controls would have a more immediate impact on speculative flows.

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Madalyn

1 months ago

But wouldn't a fall in interest rates also attract short-term capital?

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Emile

2 months ago

C) The abolition by the country of previously-imposed exchange controls which deterred inward investment

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Nickolas

2 months ago

A fall in interest rates might also encourage short-term capital inflows, but C seems like the best answer here.

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Albina

1 months ago

B: I agree, it makes sense that removing barriers to investment would attract more capital into the country.

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Paola

1 months ago

A: I think C is the best answer because abolishing exchange controls would definitely encourage short-term capital flow.

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Curtis

1 months ago

User 2: I agree, removing exchange controls would definitely encourage short-term capital flow.

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Hildred

2 months ago

User 1: I think C is the best answer.

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Lezlie

2 months ago

But wouldn't option D also attract capital flow by creating jobs and boosting the economy?

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Glen

2 months ago

I agree with Hui, removing exchange controls would attract investors.

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Yuriko

2 months ago

C is the correct answer. The abolition of exchange controls would encourage speculative short-term capital inflows.

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Deonna

1 months ago

D) Foreign-based multinational companies locating new factories in the country

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Allene

1 months ago

C) The abolition by the country of previously-imposed exchange controls which deterred inward investment

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Mitzie

2 months ago

B) An expected depreciation of the country's exchange rate

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Donette

2 months ago

A) A fall in the country's interest rates

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Hui

2 months ago

I think option C would encourage short-term capital flow.

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