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Basic Question 4 of 6
If the U.S. runs a large current account deficit, global investors may reduce their holdings of U.S. dollar denominated assets and thus cause U.S. dollar to depreciate. This is the theory of:
B. The debt sustainability channel.
C. The portfolio balance channel.
A. The asset preference channel.
B. The debt sustainability channel.
C. The portfolio balance channel.
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I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
explain how flows in the balance of payment accounts affect currency exchange rates;
CFA® 2025 Level II Curriculum, Volume 1, Module 8.