Assume that in 2006, the dollar-euro exchange rate was 1 and in 2007 it was .75. If you have $100 million in assets in Germany in 2006, then in 2007 your assets in Germany are:

Question

Quizplus · Accepted Answer

In 2006, with an exchange rate of 1, $100 million would be equivalent to 100 million euros. In 2007, with the exchange rate at .75, each euro is worth more in dollars. To find the value in dollars, you divide the euro amount (100 million) by the exchange rate (.75), which equals approximately $133.33 million. This means the assets are worth more in dollar terms in 2007 due to the change in the exchange rate.

Assume That in 2006, the Dollar-Euro Exchange Rate Was 1