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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3 days 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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5 days ago

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

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6 days ago

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

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7 days ago

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

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9 days ago

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

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