Question

When selling a fixed amount of a base currency to purcahsed a counter currency, which of the following factors is primarily used to determine how much of the counter currency the customer will receive?

Answer 1

The exchange rate is the primary factor in determining how much counter currency one will receive when selling a base currency.

Step-by-step explanation:

When selling a fixed amount of a base currency to purchase a counter currency, the primary factor used to determine how much of the counter currency the customer will receive is the exchange rate. For example, if a business newspaper indicates that the Mexican peso will appreciate, demand for pesos might increase, moving the exchange rate from 10 cents/peso to 12 cents/peso. This change means that now a person will receive fewer pesos for the same amount of base currency because the value of each peso has increased in terms of the base currency.