Currency exchange rates. ?? On the day you arrive in? England, the exchange rate

Question

Currency exchange rates.??On the day you arrive in? England, the exchange rate for U.S. dollars and British pounds is ?$1:£0.52. You have ?$3,900?, which you convert to pounds. While you remain in England for the next two? weeks, the exchange rate falls to $1:£0.47. As you leave? England, you convert the ?£123 you have left to dollars. How much did you spend in England in U.S.? dollars? Did the movement in the exchange rate help or hurt? you?

How much did you spend in England in U.S.? dollars?

?(Round to the nearest? cent.)

Did the movement in the exchange rate help or hurt? you????(Select the best? response.)

A.

The decrease in the indirect rate helps because I was able to buy pounds low and later sell them high.

This is the correct answer.

B.

The decrease in the indirect rate has no effect because it happened before I sold the remaining pounds.

C.

The decrease in the indirect rate hurts because I was only able to buy pounds high and later sell them low.

Your answer is not correct.

D.

The decrease in the indirect rate has no effect because I bought pounds before the change.

Explanation / Answer

Solution:

Nos of dollars avaiable on reaching england = $3,900

Conversion of dollar in pound = $3,900 * 0.52 = 2028 pound

Pound left on leaving from England = 123 Pound

After conversion of pound, received dollar = 123/0.47 = $261.70

Money spent in england in US dollar = $3,900 - $261.70 = $3,638.30

The decrease in the indirect rate helps because I was able to buy pounds low and later sell them high.

Hence option A is correct.

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