Fundamentals of Financial Manageme...
Fundamentals of Financial Manageme...
RESULTS OF EXCHANGE RATE CHANGES Early in June 1983, it took 245 Japanese yen to equal $1. In June 2014, that exchange rate had fallen to 102 yen to $1. Assume that the price of a Japanese-manufactured automobile was $9,000 in June 1983 and that its price changes were in direct relation to exchange rates.
- a. Has the price, in dollars, of the automobile increased or decreased during the 31-year period because of changes in the exchange rate?
- b. What would the dollar price of the automobile be in June 2014, again assuming that the car’s price changes only with exchange rates?
a)
To identify: Whether the price in dollars of automobile decrease or increase during the 34-year period due to the changes in the exchange rate.
Introduction:
Exchange rate is at which one currency of a country is exchanged with the currency of another country is termed as exchange rate.
The reasons on whether the prices in dollars of automobile decrease or increase during the 34-year period due to the changes in the exchange rate are as follows:
- The exchange rate of one dollar in terms of yen was 245 yen in 1983 and 102 yen in 2014...
b)
To determine: The price of the automobile in the year 2014 in terms of Country U dollar.
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