Suppose one British pound can purchase 1.82 US dollars today in the foreign exchange market,and currency forecasters predict that the US dollar will depreciate by 12.0% against the pound over the next 30 days.How many dollars will a pound buy in 30 days?

Question

Quizplus · Accepted Answer

If the US dollar depreciates by 12% against the pound, then the new exchange rate will be:

1 pound = (1 + 0.12) * 1.82 dollars
1 pound = 2.04 dollars

Therefore, a pound will buy 2.04 dollars in 30 days. The answer is D.

Suppose One British Pound Can Purchase 1