Suppose it takes 1.82 U.S.dollars today to purchase one British pound 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 12.0% against the pound, it means the value of the dollar decreases relative to the pound. Therefore, it will take more dollars to buy a pound. A 12% increase from 1.82 is calculated as 1.82 * 1.12 = 2.0384, which rounds to 2.04.

Suppose It Takes 1