Suppose that the following situation exists in the foreign exchange market: 1 Canadian dollar buys 7.2 Chinese yuan and 1 Canadian dollar buys 5.77 South African rand.How many yuan will one rand buy?
A)1.43 yuan
B)0.80 yuan
C)5.77 yuan
D)1.25 yuan
E)7.20 yuan

Question

Quizplus · Accepted Answer

First, we need to find out the exchange rate between yuan and rand. We can do this by using cross-multiplication.

1 Canadian dollar = 7.2 Chinese yuan 
1 Canadian dollar = 5.77 South African rand

To find out how many yuan one rand will buy, we can set up the following proportion:

7.2 yuan : 1 CAD = x yuan : 5.77 rand

Cross-multiplying:

7.2 x 5.77 = 1 x

41.544 = x

Therefore, 1 rand will buy 41.544 yuan.

Alternatively, we can use inverse ratios:

1 Canadian dollar buys 7.2 yuan

Therefore, 1 yuan buys 1/7.2 Canadian dollars

1 Canadian dollar buys 5.77 rand

Therefore, 1 rand buys 1/5.77 Canadian dollars

To find out how many yuan one rand will buy:

1 rand = (1/5.77) Canadian dollars

1 yuan = (1/7.2) Canadian dollars

Thus, 1 rand will buy (1/5.77)/(1/7.2) = 1.25 yuan.

Suppose That the Following Situation Exists in the Foreign Exchange