A Canadian investor makes $10,000 in the form of a dividend payment from an American firm (think of a dividend as a type of income received from the ownership of a type of factor, e.g. capital). This money is deposited in a New York bank account. A U.S. hedge fund buys $1 million worth of German government bonds and pays for it by selling $1 million worth of French government stocks.

A Canadian investor makes $10,000 in the form of a dividend payment from an American firm (think of a dividend as a type of income received from the ownership of a type of factor, e.g. capital). This money is deposited in a New York bank account. A U.S. hedge fund buys $1 million worth of German government bonds and pays for it by selling $1 million worth of French government stocks.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter17: Financial Markets

Section: Chapter Questions

Problem 29CTQ: If you owned a small firm that had become somewhat established, but you needed a surge of financial...

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