Suppose one British pound can purchase 1.82 U.S. dollars today in the foreign exchange market, and currency forecasters predict that the U.S. dollar will depreciate by 12.0% against the pound over the next 30 days. How many dollars will a pound buy in 30 days?
A) 1.12
B) 1.63
C) 1.82
D) 2.04
E) 3.64

Question

Quizplus · Accepted Answer

If the U.S. dollar depreciates by 12% against the pound, the new exchange rate will be 1.82 * (1 + 0.12) = 2.04 dollars per pound.

Suppose One British Pound Can Purchase 1