If the dollar-euro exchange rate, E($/euro), on 30 June 2016 is $0.80 per euro, then the euro-dollar exchange rate, E(euro/$), on the same date would be: Question 3 Answer a. 0.80 b. 1.25 c. 1.00 d. 0.50
Question
If the dollar-euro exchange rate, E(0.80 per euro, then the euro-dollar exchange rate, E(euro/$), on the same date would be: Question 3 Answer
a. 0.80
b. 1.25
c. 1.00
d. 0.50
Solution
The euro-dollar exchange rate is the reciprocal of the dollar-euro exchange rate. This means you divide 1 by the dollar-euro exchange rate to get the euro-dollar exchange rate.
Step 1: Identify the dollar-euro exchange rate. In this case, it's $0.80 per euro.
Step 2: Calculate the reciprocal of the dollar-euro exchange rate. The reciprocal of a number is simply 1 divided by that number. So, 1 divided by 0.80 equals 1.25.
Therefore, the euro-dollar exchange rate, E(euro/$), on 30 June 2016 would be 1.25. So, the correct answer is:
b. 1.25
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