If the Euro-Dollar exchange rate moves to $1.25/Euro from $1.10/Euro a year ago, what is the...
If the Euro-Dollar exchange rate moves to $1.25/Euro from $1.10/Euro a year ago, what is the percentage change of Dollar? [Please remember that you have to convert the exchange rates into indirect quotes for Dollar in this case as one of the video lectures discusses. ]
Homework Answers
initial exchange rate: 1 euro = $1.25
New exchange rate: 1 euro = $1.10
Percentage change in dollar = [(new exchange rate - initial exchange rate) / Initial exchange rate] * 100
Percentage change in dollar = [($1.10 - $1.25) / $1.25] * 100
Percentage change in dollar = (-$0.15 / $1.25) * 100
Percentage change in dollar = -12%
Value of dollar decreased by 12%
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