Question

Hedgine Question 7 Suppose the exchange rate of $ Euro has been changed from $1.45 Euro to $1.4 Euro in the past year. Which of the following statement is CORRECT?

a) Euro depreciated by 3.57% against $.
b) Euro appreciated by 3.45% against $.
c) $ depreciated by 3.45% against Euro.
d) $ appreciated by 3.5796 against Euro.

Answer 1

The US dollar depreciated by 3.45% against the Euro when the exchange rate changed from $1.45 to $1.4 over the past year.

Step-by-step explanation:

The student has asked about the percentage change in the exchange rate of the Euro against the US dollar. It changed from $1.45 to $1.4 over the past year. To find the correct answer, we need to calculate the percentage change. The formula for percentage change is:

Percentage Change = ((New Rate - Old Rate) / Old Rate) * 100

Using the given figures:

Percentage Change = (($1.4 - $1.45) / $1.45) * 100

Percentage Change = (-0.05 / 1.45) * 100

Percentage Change = -3.45%

Since the value is negative, it indicates a depreciation. Therefore, answer (c) $ depreciated by 3.45% against Euro is CORRECT.