Use the information below to answer the questions that follow. Which would you r

Question

Use the information below to answer the questions that follow. Which would you rather have $100 or pound100? Which would you rather have $100 Canadian or pound100? What is the cross-rate for Canadian dollars in terms of British pounds? (Do not include the Canadian dollar sign, C$. Round your answer to 4 decimal places, e.g., 32.1616.)Cross-rate C$ What is the cross-rate for British pounds in terms of Canadian dollars? (Do not include the pound sign, pound. Round your answer to 4 decimal places, e.g., 32.1616.) Cross-rate pound

Explanation / Answer

Answer: You would prefer £100, since:

(£100)($1.5863/£1) = $158.63

Answer: 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)($1.5863/£1)(C$0.9880/$1) = C$156.73

Answer: Using the quotes in the book to find the C$/£ cross rate, we find:

(C$0.9880/$1)($1.5863/£1) = C$1.5673/£1

Answer: The £/C$ exchange rate is the inverse of the C$/£ exchange rate, so:

£1/C$1.5673 = £0.63803/C$

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