At the beginning of 2014 country a's net international investment position is - at book (or accounting) value - equal to $0. during 2014 country a's residents purchase shares in country b's stock market for $500, and country a's government sells treasury bonds to country b's residents for $500. country a's current account balance in 2014 and 2015 is 0, and no other financial account entries are recorded in country a's balance of payments. at the end of 2015, however, country b's shares owned by country a residents have increased their value by 10%, while the country a's treasury bonds owned by country b's residents have lost 5% of their original market value. what is the market value of country a's net international investment position at the end of 2015

$50; $550; $25; $475; $75

Explanation:

Increase in value:

= Investment made × Percentage change

= (500 × 10) ÷ 100

= 50

Thus, the increase in value of country A is $50.

New value = Original value + Increased value

                  = $500 + $50

                  = $550

Therefore, the new value of country A's investment in a foreign country at the end of 2015 is $550.

(b) The value of foreign country's investment in country A has decreased to 5%.

Decrease in value = Original value × Decreased value

                               = (500 × 5) ÷ 100

                               = 2,500 ÷ 100

                               = 25

Therefore, decrease in value of country A is $25.

New value = Original value - Decreased value

                  = $500 - $25

                  = $475

Thus, the value of foreign countries invests in the country A at the end of 2015 is $475.

Net international investment position:

= (value of country A's investment in a foreign country at the end of 2015) - (value of foreign countries investment in the country A at the end of 2015)

= $550 - $475

= $75

Thus, the market value of the country A's net international investment position at the end of 2015 is $75.

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