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low much did you spend in England in U.S. dollars? Did the movement in the exchange rate help or hurt you?

low much did you spend in England in U.S. dollars? Did the movement in the exchange rate help or hurt you?

International Financial Management
International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter7: International Arbitrage And Interest Rate Parity
Section: Chapter Questions
Problem 34QA
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Chapter 18, Question 4. Attached is a similar question with answers. Please answer in similar format

Currency exchange rates. On the day you arrive in England, the exchange rate for U.S. dollars and British pounds is $1:£0.49. You have $4,200, which you convert to pounds. While you remain in England for the next two weeks, the exchange rate falls to $1:£0.46. As you leave England, you convert the £142 you have left to dollars. How much did you spend in England in U.S. dollars? Did the movement in the exchange rate help or hurt you?
Transcribed Image Text:Currency exchange rates. On the day you arrive in England, the exchange rate for U.S. dollars and British pounds is $1:£0.49. You have $4,200, which you convert to pounds. While you remain in England for the next two weeks, the exchange rate falls to $1:£0.46. As you leave England, you convert the £142 you have left to dollars. How much did you spend in England in U.S. dollars? Did the movement in the exchange rate help or hurt you?
Currency exchange rates. On the day you arrive in England, the exchange rate for U.S. dollars and British pounds is $1:£0.55. You have $4,000, which you convert to pounds. While you remain in England for the next two weeks, the exchange rate falls to $1:£0.51. As you leave England, you convert the £152 you have left to dollars. How much did you spend in England in U.S. dollars? Did the movement in the exchange rate help or hurt you? How much did you spend in England in U.S. dollars? $ 3,701.96 (Round to the nearest cent.) Did the movement in the exchange rate help or hurt you? (Select the best response.) O A. The decrease in the indirect rate hurts because I was only able to buy pounds high and later sell them low. CB. The decrease in the indirect rate has no effect because it happened before I sold the remaining pounds. Cc. The decrease in the indirect rate helps because I was able to buy pounds low and later sell them high. O D. The decrease in the indirect rate has no effect because I bought pounds before the change.
Transcribed Image Text:Currency exchange rates. On the day you arrive in England, the exchange rate for U.S. dollars and British pounds is $1:£0.55. You have $4,000, which you convert to pounds. While you remain in England for the next two weeks, the exchange rate falls to $1:£0.51. As you leave England, you convert the £152 you have left to dollars. How much did you spend in England in U.S. dollars? Did the movement in the exchange rate help or hurt you? How much did you spend in England in U.S. dollars? $ 3,701.96 (Round to the nearest cent.) Did the movement in the exchange rate help or hurt you? (Select the best response.) O A. The decrease in the indirect rate hurts because I was only able to buy pounds high and later sell them low. CB. The decrease in the indirect rate has no effect because it happened before I sold the remaining pounds. Cc. The decrease in the indirect rate helps because I was able to buy pounds low and later sell them high. O D. The decrease in the indirect rate has no effect because I bought pounds before the change.
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