When a foreign investor buys a bond issued in Canada,

Question

Quizplus · Accepted Answer

When a foreign investor buys a bond issued in Canada, it is a financial transaction that leads to an increase in the balance on the financial account. The capital account records non-produced, non-financial transactions such as transfers of ownership of fixed assets and the forgiveness of debt, so it is not affected in this scenario. The current account records goods, services, income, and current transfers, which are also not relevant here. The balance of trade is the difference between exports and imports of goods and services, so it is not directly affected by this financial transaction.

When a Foreign Investor Buys a Bond Issued in Canada