- On April 17, 2018 the exchange rate between the Canadian dollar and the US dollars...

- On April 17, 2018 the exchange rate between the Canadian dollar and the US dollars was 1 CAD = 0.796 USD. On April 5, 2019 the exchange rate was 1 CAD = 0.780 USD. Did the Canadian dollar appreciate or depreciate and by what percent? (1 point)

- Find the exchange rate in terms of US dollars per British pound if on April 5, 2019 the exchange rate between the US dollar and the Mexican peso was 1 USD = 19.07 MXN, and between British pound and Mexican peso 1 GBP = 24.87 MXN. (1.5 points)

Solutions

Expert Solution

Answer : 1) Based on given information, on 17 April, 2018 the exchange rate was , 1 CAD = 0.796 USD.

On 5 April, 2019 the exchange rate was, 1 CAD = 0.780 USD.

Now we can see that U.S. gets 1 CAD at 0.780 USD in 2019 where U.S. gets 1 CAD at 0.796 USD in 2018. This means that the value of Canadian dollar falls. Because U.S. gets 1 CAD by spending less US dollar in 2019 in compared to 2018. Therefore, the Canadian dollar depreciates.

For 1 CAD the changes in USD = 0.796 - 0.780 = 0.016 USD.

% changes in USD for 1 CAD = (For 1 CAD the changes in USD / Initial USD) * 100

=> % changes in USD for 1 CAD = (0.016 / 0.780) * 100

=> % changes in USD for 1 CAD = 0.020 * 100 = 2%

Therefore, the Canadian dollar depreciates by 2%.

2) Based on given information,

19.07 MXN = 1 USD

=> 1 MXN = 1 / 19.07 = 0.05 USD

As 1 MXN = 0.05 USD,

so, 24.87 MXN = 0.05 * 24.87 = 1.24 USD.

As 1 GBP = 24.87 MXN and as 24.87 MXN = 1.24 USD, hence 1 GBP = 1.24 USD.

Therefore, the exchange rate between US dollar and British pound is, 1 GBP = 1.24 USD.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Today is Jan. 31, 2021 and the current exchange rate between US dollar and Canadian dollar...

Today is Jan. 31, 2021 and the current exchange rate between US dollar and Canadian dollar is US$0.7946/CAD (U.S. is the home country). The current June 2021 Micro CAD/USD Futures exchange rate is US$0.7949/CAD. Contract size is CAD $10,000. For more information about this futures contract, please go to the website below: The risk-free rate in Canada is 0.15% per annum with continuously compounding. Assume all futures contracts expire in the last day of the month. What should the risk-free...

The real exchange rate between the U.S. dollar and the Canadian dollar will remain constant if...

The real exchange rate between the U.S. dollar and the Canadian dollar will remain constant if an increase in the value of the U.S. dollar against the Canadian dollar is offset by: A) inflation in the United States. B) inflation in Canada. C) worldwide deflation. D) inflation in the United States and in Canada. Please explain

](Currency Exchange) You are given the exchange rate from Canadian to US dollars. You are asked...

](Currency Exchange) You are given the exchange rate from Canadian to US dollars. You are asked to convert an amount either from Canadian to US or vice versa based on the user's request. Write a C++ program that prompts the user to enter: a. the exchange rate from currency in Canadian dollars to US dollars b. either 0 to convert from Canadian to US or 1 to convert from US to Canadian (the program displays a message for invalid input)...

In March 2009, the Canadian dollar was worth $0.78 U.S. dollars. In April 2011, the Canadian...

In March 2009, the Canadian dollar was worth $0.78 U.S. dollars. In April 2011, the Canadian dollar was worth $1.06 U.S. dollars. What effect would this increase have on the trade balance between the United States and Canada? a) Canadian imports will rise and Canadian exports will fall, so the Canadian trade balance will fall and the U.S. trade balance will rise. b) Canadian imports will fall and Canadian exports will rise, so the Canadian trade balance will rise and...

The exchange rate between Pounds and US dollars is determined by the intersection of the demand...

The exchange rate between Pounds and US dollars is determined by the intersection of the demand and supply curves for euros in terms of dollars. Explain how an increase in US inflation relative to English inflation will effect equilibrium exchange rates.

Suppose that the current spot exchange rate between the US dollar and NZ dollar is $.70/NZ$...

Suppose that the current spot exchange rate between the US dollar and NZ dollar is $.70/NZ$ and the 1-year forward rate is $.695. The one year interest rates are 1% for the USD and 3% for the NZ$. What is the payoff if a US MNC conducts covered interest arbitrage, for a $1,000,000 starting amount? 1,022,643 $1,010,000 $985,857 $1,000,540

The current spot exchange rate between the US Dollar and the Yen is 113 (i.e., $1...

The current spot exchange rate between the US Dollar and the Yen is 113 (i.e., $1 buys 113 Yen). What is the “fair price” for a 12month forward contract (dollars for yen) if the US borrowing cost is 5% per annum and the investment return on a Yen denominated Certificate of Deposit is 1.0%? Given the above information, would you purchase a forward contract offered at 105 Yen to the Dollar from your dealer or create a “synthetic forward contract” on...

. Discuss the impact of higher economic growth on the exchange rate of the Canadian dollar...

. Discuss the impact of higher economic growth on the exchange rate of the Canadian dollar according to the monetary approach to the exchange rate model. Why does the model makes this prediction? The Keynesian approach to the exchange rate model. Why does the model makes this prediction?

The follow table list foreign exchange rates between US dollars and British pounds (GBP) during April...

The follow table list foreign exchange rates between US dollars and British pounds (GBP) during April Date U.S. Dollars per GBP 4/1 1.9564 4/4 1.9293 4/5 1.914 4/6 1.9374 4/7 1.961 4/8 1.8925 4/11 1.8822 4/12 1.8558 4/13 1.796 4/14 1.7902 4/15 1.7785 4/18 1.7504 4/19 1.7255 4/20 1.6914 4/21 1.672 4/22 1.6684 4/25 1.6674 4/26 1.6857 4/27 1.6925 4/28 1.7201 4/29 1.7512 Which day would have been the best day to convert $200 into British pounds? Which day would...

f the exchange rate between US and Iceland is 1 U.S. dollar for 100 Iceland Krona,...

f the exchange rate between US and Iceland is 1 U.S. dollar for 100 Iceland Krona, the U.S. economy is stronger than the Icelandic economy, and U.S. consumers have 100 times more buying power in Icelandic consumers. Do you agree or disagree with the statement.

Subjects