Question
(NIIP and NII for a two-country world) Country 1's international asset position, denoted A, consists of $10 of bonds issued by Country 2's government and
(NIIP and NII for a two-country world) Country 1's international asset position, denoted A, consists of $10 of bonds issued by Country 2's government and $20 of equities issued by Country 2's corporations. Country 1's international asset position, denoted A, consists of $10 of bonds issued by the government of Country 2 and $20 of equities issued by Country 2's corporations. Country 1's international liabilities, denoted as L, consist of 35 of bonds issued by the government of Country 1 that are held by foreign residents, and $5 of shares of a company in Country 1 that are held by foreigners. Assume that the return on government bonds is 2 percent and the return on stocks is 6 percent. 1. compute the net international investment position (NIIP) and net investment income (NII) for Country 1. 2. Assume that you are observing Country 1's NIIP and NII (refer to the numbers you solved for in Problem 1) rather than the returns on bonds and stocks. returns. Assume further that your interpretation of the observed values of NIIP and NII is dark matter. Assuming a return on all assets of Assuming a 3% return on all assets, how big is the dark matter for country 1? What is Country 1's "true" net international investment position, TNIIP? Help me to answer the following questions
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