Question

Q1. If it takes $0.85 U.S. dollars to purchase one Swiss franc, how many Swiss francs can one

U.S. dollar buy? 

Q2.Suppose it takes 1.3037 U.S. dollars today to purchase one British pound in the foreign exchange market, and currency forecasters predict that the U.S. dollar will depreciate by 15% against the pound over the next 30 days. How many dollars will a pound buy in 30 days?  

Answer 1

$0.85 U.S. dollars need to purchase one Swiss franc.

So, $0.85 = 1 Swiss Franc

$1 = 1/0.85 = 1.176470588

or 1.1765 Swiss Franc

So, for 1 U.S. dollars, 1.1765 Swiss franc can be purchased.

(b)

Today rate $1.3037 = 1 British pound

In next 30 days U.S. dollars will depreciate by 15%.

Whenever one currency depreciates in % terms, % will adjusted in reverse currency.

US. dollars depreciates,

so British pound purchased for $1.3037 = 1-15% = 0.85 British pound

0.85 British pound = $1.3037

1 British pound = 1.3037/0.85

= 1.533764706 or $1.15338

So, a pound will buy $1.5338 dollars in 30 days.