If the C$ weakens by 2½ % relative to the US$ (US$1.00 = C$1.0852), what will be the new value for the US$ per C$1.00?

Question

Quizplus · Accepted Answer

If the C$ weakens by 2½ % relative to the US$, it means that the US$ will become more expensive in terms of the C$. To calculate the new value of the US$ per C$1.00, we can use the following formula:New US$ value = Old US$ value / (1 - % change)In this case, the old US$ value is US$1.00 and the % change is -2½ % (or -0.025). Plugging these values into the formula, we get:New US$ value = US$1.00 / (1 - 0.025) = US$1.02564Therefore, the new value for the US$ per C$1.00 is US$1.02564, which is closest to choice B) US$0.94512 per C$1.00.

If the C$ Weakens by 2½ % Relative to the US