Suppose that the following situation exists in the foreign exchange market: 1 Canadian dollar buys $1.05 U.S, and 1 Canadian dollar buys 8.6 Chinese yuan. How many yuan will $1 U.S. buy?
A)8.6 yuan
B)1.0 yuan
C)8.2 yuan
D)0.12 yuan
E)0.14 yuan

Question

Quizplus · Accepted Answer

First, we need to find the exchange rate between the U.S. dollar and the Canadian dollar, which is the reciprocal of 1.05, or approximately 0.9524 Canadian dollars per U.S. dollar. 
Next, we can use the exchange rate between the Canadian dollar and the Chinese yuan to find the exchange rate between the U.S. dollar and the Chinese yuan. 
To do this, we can divide the exchange rate between the Canadian dollar and the Chinese yuan (8.6) by the exchange rate between the Canadian dollar and the U.S. dollar (0.9524). 
This gives us: 8.6/0.9524 = 9.03
Therefore, $1 U.S. will buy approximately 9.03 Chinese yuan. 
The closest answer choice is C, 8.2 yuan, but this is not the exact answer.

Suppose That the Following Situation Exists in the Foreign Exchange