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Chapter 18: Q18 (page 496)

If the Canadian dollar to U.S. dollar exchange rate is 1.24 and the British pound to U.S. dollar exchange rate is 0.68, what must be the Canadian dollar to British pound exchange rate?

Short Answer

Expert verified

The exchange rate would be1.8235Canadiandollars per Britishpound.

Step by step solution

01

Concept Introduction

Exchange rate is that the rate at which domestic currency is exchanged with foreign currency. Exchange rate provides the relative price of fine in terms of domestic and foreign currency. charge per unit is incredibly volatile and it affects the economy's foreign trade. charge per unit is calculated as:

Exchange Rateet=Foreign pricelevelPfDomestic PricelevelPd

02

Explanation of Solution 

Exchange rate ofCanadiandollartoUS dollar is1.24.

Exchange rate of BritishpoundtoUS dollar is0.68.

Calculation of the exchange rate betweenCandB:

localid="1646989707158" Exchangerate=1.24×10.68=1.8235

localid="1646989794752" role="math" Therefore, the exchange rate would be1.8235Canadiandollars per Britishpound.

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