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Chapter 18

# Chapter 18 - 1 Use the information below to answer the...

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1. Use the information below to answer the following questions. U.S. \$ EQUIVALENT CURRENCY PER U.S. \$ Poland Zloty 0.3053 3.3707 Euro 1.3166 0.7595 Mexican Peso 0.0761 13.1406 Switzerland Franc 0.8847 1.1326 Chilean Peso 0.001738 575.37 New Zealand Dollar 0.6619 1.5108 Singapore Dollar 0.5752 1.7385 Requirement 1: If you have \$100, how many Polish zlotys can you get? (Do not include the Polish zlotys sign (Z). Round your answer to 2 decimal places (e.g., 32.16).) Amount Z Requirement 2: How much is one euro worth? (Do not include the dollar sign (\$). Round your answer to 4 decimal places (e.g., 32.1616).) Worth of one euro \$ Requirement 3: If you have 4.00 million euros, how many dollars do you have? (Do not include the dollar sign (\$). Enter your answer in dollars, not millions of dollars (e.g., 1,234,567). Round your answer to the nearest whole dollar amount (e.g., 1,234,567).) Amount \$ Requirement 4: Which is worth more, a New Zealand dollar or a Singapore dollar? New Zealand dollar Requirement 5: Which is worth more, a Mexican peso or a Chilean peso?

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Mexican peso Requirement 6: (a) How many Swiss francs can you get for a euro? (Round your answer to 4 decimal places. (e.g., 32.1616).) Amount SF/€ (b) What do you call this rate? Cross rate Explanation: Using the quotes from the table, we get: 1: \$100(Z3.3707/\$1) = Z337.07 2: \$1.3166 3: €4,000,000(\$1.3166/€) = \$5,266,400 Alternatively the question can be answered as: €4,000,000 / (\$0.7595/€) = \$5,266,623 The difference is due to rounding in the exchange rate quote. 4: New Zealand dollar 5: Mexican peso 6: (a) (SF1.1326/\$)(\$1.3166/€) = 1.4912 SF/€ (b) This is a cross rate.
2. Use the information below to answer the questions that follow. U.S. \$ EQUIVALENT CURRENCY PER U.S. \$ U.K. Pound (£) 1.4769 0.6771 Canada dollar .8051 1.2421 Requirement 1: Which would you rather have, \$100 or £100? 100 Pounds Requirement 2: Which would you rather have, \$100 Canadian or £100? 100 Pounds Requirement 3: (a) What is the cross-rate for Canadian dollars in terms of British pounds? (Do not include the canadian dollar sign (C\$). Round your answer to 4 decimal places (e.g., 32.1616).) Cross-rate C\$ /£1 (b) What is the cross-rate for British pounds in terms of Canadian dollars? (Do not include the pound sign (£). Round your answer to 4 decimal places (e.g., 32.1616).) Cross-rate £ /C\$ Explanation: 1: You would prefer £100, since: (£100)(\$1.4769/£1) = \$147.69 2:

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You would still prefer £100. Using the \$/£ exchange rate and the C\$/\$ exchange rate to find the amount of Canadian dollars £100 will buy, we get: (£100)(\$1.4769/£1)(C\$1.2421/\$1) = C\$183.45 3: (a) Using the quotes in the book to find the C\$/£ cross rate, we find: (C\$1.2421/\$1)(\$1.4769/£1) = C\$1.8345/£1 (b) The £/C\$ exchange rate is the inverse of the C\$/£ exchange rate, so: £1/C\$1.8345 = £0.5451/C\$ 3.
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