Which Currency Trade Is Consistent with the Current Exchange Rates

question 206

Multiple Choice

Which currency trade is consistent with the current exchange rates of 500 Chilean pesos for US$1 and £1 for US $1.50?

• A) 1,250 Chilean pesos for £2
• B) 1,000 Chilean pesos for £2
• C) £10 for 750 Chilean pesos
• D) 1,500 Chilean pesos for £2

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Definitions:

Investing Activities

Financial activities related to the acquisition and disposal of long-term assets and other investments not included in cash equivalents.

Buying Stocks

The act of purchasing shares in a company with the expectation of earning a return on investment through dividends or stock price appreciation.

Cash Flow

Cash flow refers to the net amount of cash and cash-equivalents being transferred into and out of a business.

Direct Method

A cash flow statement preparation approach that involves reporting major classes of gross cash receipts and payments.