Question

you are given the following exchange rates for the Canadian dollar versus the U.S. dollar

In US $ Per US $

Last week .8078 1.2379

This week .8080 1.2376

Which one of the following statements is correct given this information?

Last week, it took Can$0.8078 to purchase US$1.

This week you can exchange one Canadian dollar for $1.2376 American.

It is cheaper for an American to travel in Canada this week as compared to last week.

The Canadian dollar depreciated from last week to this week.

You would have made a profit if you invested U.S. $100 in Canadian dollars last week and then converted your money back to U.S. dollars this week. Ignore any interest earnings.

Answer 1

Answer>

As per the data given in the question -

Last Week

Price of 1 canadian dollar (in USD) = 0.8078

Price of 1 US dollar (in Canadian Dollars) = 1.2379

This Week

Price of 1 Canadian dollar (in USD) = 0.8080

Price of 1 US dollar (in Canadian Dollars) = 1.2376

Statement 1

Price of Canadian dollar to purchase 1 US dollar this week = 1.2376

Hence statement 1 is false

Statement 2

This week, 1 Canadian dollars can be exchanged with 0.8080 US Dollars

Hence statement 2 is false

Statement 3

Value of US Dollars in Canadian dollars last week = 1.2379

Value of US Dollars in Canadian dollars this week = 1.2376

Since the value of US Dollars has depreciated, it has become costlier for an American to visit Canada this week compared to last week

Hence statement 3 is false

Statement 4

Last week, 1 Canadian dollar could buy = 0.8078 USD

This week, 1 Canadian dollar can buy = 0.8080 USD

Hence the value of Candaian dollar has appreciated this week.

Hence statement 4 is false

Statement 5

Value of 100 USD converted to Canadian dollars last week = 1.2379 * 100 = 123.79 Canadian Dollars

Value of 123.79 Canadian Dollars converted to USD this week = 0.8080 * 123.79 = 100.022 USD

Hence we would have made a profit (of $0.022) if we invested 100 USD in Canadian dollars last week and then converted our money back to USD this week.

Hence the statement is true

Therefore, the correct answer is statement 5