Exam 2 Assignment Example | Topics and Well Written Essays - 750 words

Exam 2 - Assignment Example The transactions of Canada in these first two quarters of the financial year in terms of capital account, current accounts and financial accounts did not balance but showed some shift in a negative manner to -16263 dollars. In the third quarter the balance of payments further increased to -17298 dollars while in the final quarter there was a noticeable change in positive manner to -14762 dollars. In the financial year 2013 the first quarter witnessed a steady positive change in its balance of payment to -14552 dollars. There was however a negative shift further in the second quarter to -14861 dollars. The third quarter of this financial year further witnessed a shift to the positive of its balance of payments to -14250 dollars. During the final financial quarter, the liabilities outweighed the assets to a further negative change up to -15251dollars. However, these changes were due to several contributing factors that kept changing towards either direction of economic shift. These cha nges occurred due to changes in current accounts, financial accounts and capital accounts. As evident in this statistics, the economic power of Canada lies majorly on imports than exports. This is the contributing factor in this negative balance of payments. The balance on goods, imports and exports improved but more on the negative with transactions with international business community shifting to the negatives and showing that the business was more on the inside than outside. However Canada can improve its BOP by improving its manufacturing industry and also promoting innovation and agriculture. This is because they form the major part of raw materials and ideas thus improving exports and lowering imports. Financial risk management must be undertaken in order to have the economy of a nation moving in a positive direction (Pestieau 2012). Failure to do this would lead to exposure to either credit or market risks. Analyzing