Question

In doing the calculations, round to two decimal places.

1. Given the following currency exchange rates:

Time period 1: Sw F 1.55/US$

Time period 2: Sw F 1.35/US$

a.From time period 1 to time period 2, Sw F has depreciated in value relative to US$.

A)True B)False

b.From time period 1 to time period 2, US$ has appreciated in value relative to Sw F.

A)True B)False

c.In time period 1, if the price of Product A was Sw F 16,500, then its price in US$ should be:

A) US$ 10,725

B) US$ 25,575

C) Sw F US$ 10,725

D) Sw F US$ 25,575

d.In time period 2, if the price of Product A was Sw F 16,500, then its price in US$ should be:

A) US$12,210

B) US$22,275

C) Sw F US$12,210

D) Sw F US$22,275

e.In time period 1, if the price of Product B was US$23,500, then its price in SwF should be:

A) SwF 15,275

B) SwF 36,425

C) US$ SwF 15,275

D) US$ SwF 36,425

f.In time period 2, if the price of Product B was US$23,500, then its price in SwF should be:

A) Sw F 17,390

B) Sw F 31,725

C) US$ Sw F 17,390

D) S$ Sw F 31,725

Answer 1

Time period 1: Sw F 1.55/US$

Time period 2: Sw F 1.35/US$

a. From time period 1 to time period 2, Sw F has depreciated in value relative to US$.

FALSE

The US$ has depreciated in value relative to Sw F. We have US$ as the base currency and the exchange rate has decreased. So, the base currency has depreciated. Sw F has appreciated in value in relative to US$.

b. .From time period 1 to time period 2, US$ has appreciated in value relative to Sw F.

FALSE.

In time period 1, the US$ would buy 1.55 Sw F, but in time period 2, the US$ buys only 1.35 Sw F. So, US$ has depreciated in value relative to Sw F.

c. In time period 1, if the price of Product A was Sw F 16,500, then its price in US$ should be:

Time period 1: Sw F 1.55/US$

The price of Product A in US$ = 16,500/1.55 = 10,645.1612903226 US$

Option A is correct

d. In time period 2, if the price of Product A was Sw F 16,500, then its price in US$ should be:

Time period 2: Sw F 1.35/US$

The price of Product A in US$ = 16,500/1.35 = 12,222.2222222222 US$

Option A is correct

e.In time period 1, if the price of Product B was US$23,500, then its price in SwF should be:

Time period 1: Sw F 1.55/US$

The price of product B in Sw F = 23,500 * 1.55 = 36,425 Sw F

Option B is correct

f.In time period 2, if the price of Product B was US$23,500, then its price in SwF should be:

Time period 2: Sw F 1.35/US$

The price of product B in Sw F = 23,500 * 1.35 = 31,725 Sw F

Option B is correct