Question 1

The exchange rate between the US$ and the C$ declines from US$0.9993 to US$0.9846 per C$. What will be the change in the C$ price to an importer of a US$2,000 item?

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Question 2

A cross-border shopping trip reveals that milk sells for US$2.99 per one-gallon jug versus C$4.99 per four-litre jug in Canada. Calculate the percent difference between Canada and the United States in the exchange rate-adjusted price of milk. Use the Canadian price as the base in the comparison. (1 U.S. gallon = 3.785 litres).

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Question 3

a) Based on the exchange rates in the above table, to the nearest 0.01%, what was the percent transaction cost on your purchase of £250 from each of the Royal Bank and the airport currency exchange kiosk? On any currency exchange transaction, airport kiosk applies a C$3.50 service charge.
b) You returned from your trip to Scotland with £16. Assuming the exchange rates remained the same, what percent transaction cost would you have paid to convert £16 back to C$ at the Royal Bank and at airport currency exchange kiosk?

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Question 4

Based on the exchange rates in the above table, how many fewer Canadian dollars will you receive if you convert US$165 at the airport currency exchange kiosk instead of at the Royal Bank? On any currency exchange transaction, the airport currency exchange kiosk applies a C$3.50 service charge.

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Question 5

Based on the exchange rates in the above table, how many more British pounds can you obtain with C$2,000 at the Royal Bank than at the airport kiosk? On any currency exchange transaction, Airport Kiosk applies a C$3.50 service charge.

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Question 6

If the number of £ per C$1.00 rises from 0.6370 to 0.6403, what will be the change in the C$ revenue from a foreign contract fixed at £23,000?

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Question 7

Using the exchange rates in Table 3.2, show that you will receive as many euros for C$1150 by first converting the dollars to pounds and then converting the pounds to euros, as you would by converting the dollars directly to euros.

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Question 8

Dofasco can buy iron ore pellets from Minnesota at US$133 per short ton (2,000 pounds) or from Labrador at C$165 per metric tonne (1,000 kg). Which source is more expensive? How much more expensive is it in C$ per metric tonne? (1 pound = 0.4536 kg)

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Question 9

Hamish and Grace MacDonald have been investigating the cost of a holiday in Britain. From their home in Welland, Ontario, it is equally inconvenient to fly out of Toronto or Buffalo, New York. On the Internet, they have found that they can fly Buffalo-London return on American Airlines for US$656 each, rent a hotel room in London for two people for one night at a cost of £87, and join Jolly Tours the next day for a two-week all-inclusive coach tour at a cost of £1,150 per person. Alternatively, the MacDonalds can purchase an all-inclusive package (including a similar coach tour) from a local travel agent for C$3,595 per person. Which alternative is cheaper? How much cheaper is it in C$ for two people?

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Question 10

The "basket" of goods and services included in the Consumer Price Index cost $21,350 on the base date. Eight years later, the same basket cost $26,090. What was the CPI on the latter date?

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Question 11

If the C$ strengthens by 1.2% relative to the US$ value, C$1.00 = US$0.9672, what will be the new values for US$ per C$1.00 and C$ per US$1.00?

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Question 12

If C$1.00 rises from ¥87.94 to ¥89.78, what will be the change in the C$ price to an importer of a ¥2,965,000 car?

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Question 13

If the number of US$ per C$1.00 declines from 0.9721 to 0.9685, what will be the change in the C$ price per ounce of gold which a Canadian gold mine sells at the international price of US$1392 per ounce?

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Question 14

If the C$ appreciates (from the value C$1.5698 = £1.00) by C$0.0017 relative to the £, what will be the new value for £ per C$1.00?

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Question 15

If the US$ per £ exchange rate increases by US$0.006 from its value US$1.00 = ₤0.6586, what will be the change in the £ per US$ exchange rate?

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Question 16

If the C$ weakens by 0.5% relative to the €, C$1.00 = €0.7448, what will be the new values for € per C$1.00 and C$ per €1.00?

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Question 17

A customized up-to-date Currency Cross Rate table (in the style of Table 3.2) may be created by using the Web site maintained by the OANDA Corporation. You can link to this site from the textbook's Web site. Go to www.mcgrawhill.ca/olc/jerome/and work your way to the page for the Student Edition. In the Student Edition's navigation bar, select "Chapter 3" in the drop-down box. In the list of resources for Chapter 3, select "Links in Textbook" and then click on the link named "Create a Cross Rate Table." Hold down your CTRL key while selecting the currencies you want in the table. Then click on "Get my Table."
a) How many more or fewer C = will C$10,000 buy today than on the date in Table 3.2?
b) How many more or fewer £ will ¥10,000 buy today than on the date in Table 3.2?

Accepted Answer

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Question 18

A steel company in Hamilton can purchase Alberta coal at C$105 per metric tonne (1,000 kg) or West Virginia coal at US$95 per ton (2,000 lb) (1 kg = 2.205 lb). How much cheaper in C$ per metric tonne is the less expensive source if US$0.975 = C$1.00?

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Question 19

The exchange rate between Currencies X and Y is currently Y0.05614 = X1.00. If X weakens by 1.5% relative to Y, what will be the new values for the exchanges rates per unit of X and per unit of Y?

Accepted Answer

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Question 20

If the number of ¥ per C$1.00 declines from 97.561 to 95.445, what will be the change in the C$ price to an importer of a ¥195,000 item?

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Quiz 3: Ratios and Proportions