Question

2.In doing the calculations, round to two decimal places.

Given the following currency exchange rates:

Time period 1: HK$6.50/C$

Time period 2: HK$5.50/C$

a.From time period 1 to time period 2, HK$ has depreciated or appreciated relative to C$.

A)depreciated B)appreciated

b.The % change of the value of HK$ from time period 1 to time period 2 is:

A) -15.38%

B) +15.38%

C) -20%

D) +20%

c.From time period 1 to time period 2, C$ has depreciated or appreciated relative to HK$.

A)depreciated B)appreciated

d.The % change of the value of C$ from time period 1 to time period 2 is:

A) -15.38%

B) +15.38%

e.In order to be successful in a foreign country, an international marketer must comply with all the country’s customs.

A)True B)False

2a.This year, a company has a sales revenue increase from last year, that means:

A)its profits have also increased.

B)its profits have decreased.

C)not enough information is given to know whether profits have increased or decreased.

2b.Relative to another currency, the value of US$:

A)can increase by more than 100% or decrease by more than 100%.

B)can increase by more than 100%, but cannot decrease by more than 100%.

C)can increase by not more than 100%, or decrease by more than 100%.

C) -20%

D) +20%

Answer 1

2a.HK$ has appreciated against the US dollar. The premise here is that at time period 1, it takes 6.5HK$ to buy 1 C$, but at time period 2, it takes only 5.5HK$ to buy the same 1 C$. Hence HK$ has been appreciated

b. The percentage of appreciation=(6.5-5.5)/6.5=15.38%

It has been appreciated. Hence it is +15.38%

Option B is correct

c &d.C$ has been depreciated and by -15.38%

e. True.He has to comply with all the customs while doing the business for free movement of goods.

2a.Dont have enough information, becuase there are chances that costs has increased and profits could be negative. hence. we cant say that with increase in the sales revenue,profits are inevitable.

2b. US currency is the strongest currency in the world and most of the international transctions happens in the US currency. So, it is not easy to depreciate by 100% and but can appreciated by more than 100% against other currencies.

Option B is correct