Suppose one British pound can purchase 1.86 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?

Question

Quizplus · Accepted Answer

1 pound = 1.86 dollars
12% depreciation of the dollar means the new exchange rate will be:
1 pound = 1.86 x 0.88 = 1.6368 dollars
After 30 days, 1 pound will buy 1/1.6368 = $0.6103
Therefore, 1 pound will buy $2.0832 in 30 days. 
Hence, the answer is D.

Suppose One British Pound Can Purchase 1