Suppose That the Following Situation Exists in the Foreign Exchange

question 97

Multiple Choice

Suppose that the following situation exists in the foreign exchange market: 1 Canadian dollar buys $1.05 U.S, and 1 Canadian dollar buys 8.6 Chinese yuan. How many yuan will $1 U.S. buy?

• A)8.6 yuan
• B)1.0 yuan
• C)8.2 yuan
• D)0.12 yuan
• E)0.14 yuan

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Definitions:

Payments

Transactions made by individuals or entities to fulfill financial obligations, such as bills, salaries, or loans.

Operating Activities

Activities that are directly related to the day-to-day operations of a business, such as sales, purchase of inventory, and payment of expenses.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue; often referred to as the bottom line.

Transactions

Business activities or exchanges that affect the financial position of a company, involving the transfer of goods, services, money, or titles.