Suppose That the Following Situation Exists in the Foreign Exchange

question 36

Multiple Choice

Suppose that the following situation exists in the foreign exchange market: 1 Canadian dollar buys 7.2 Chinese yuan and 1 Canadian dollar buys 5.77 South African rand. How many yuan will one rand buy?

• A)0.80 yuan
• B)1.25 yuan
• C)7.20 yuan
• D)5.77 yuan
• E)1.43 yuan

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Definitions:

Measurement Principle

A financial accounting principle that determines the specific basis (historical cost or fair value) on which assets and liabilities are recorded in the financial statements.

Actual Cost

The incurred cost that reflects the real financial expenditure on a project, purchase, or activity.

Accounting Equation

The fundamental equation of double-entry bookkeeping, represented as Assets = Liabilities + Equity.

Liabilities

Obligations owed by a business to either creditors or suppliers, often in the form of loans or accounts payable.