How Much Wealthier Would You Be One Year from Now

question 73

Multiple Choice

How much wealthier would you be one year from now if you exchange $100,000 (U.S.) into Hong Kong Dollars today at an indirect rate of HK$7.8/$, earn 7% on your Hong Kong investment, and exchange back at a rate of HK$8.0/$, as compared to investing in the U.S.at 4.0%?

• A)$(2,600)
• B)$325
• C)$2,000
• D)$5,744 $100,000 x 7.8 = HK$780,000
• HK$780,000 x 1.07 = HK$834,600
• HK$834,600/8.0 = $104,325
• Compared to: $100,000 x 1.04 = $104,000,