6. Pricing foreign goods The nominal exchange rate is the price of one currency in terms of another currency. A nominal exchange rate specifies how many units of one country's currency are needed to buy one unit of another country's currency. Suppose the following table presents nominal exchange rate data for June 13, 2014, in terms of U.S. dollars per unit of foreign currency. Use the information in the table to answer the questions that follow. Foreign Currency Brazilian real (BRL) Canadian dollar (CAD) Euro (EUR) Japanese yen (JPY) Mexican peso (MXN) United Kingdom pound (GBP) Cost of One Unit of Foreign Currency (Dollars) 0.3666 0.8493 1.3288 0.009748 0.0889 1.8965 Suppose that on June 13, 2014, a marble statue handmade in the United Kingdom is priced at GBP 530. The approximate U.S. dollar price of the statue would be If the nominal exchange rate for the U.S. dollar-Mexican peso rises from $0.0889 to $0.10668 per Mexican peso, the Mexican peso in value, or , relative to the U.S. dollar.
6. Pricing foreign goods The nominal exchange rate is the price of one currency in terms of another currency. A nominal exchange rate specifies how many units of one country's currency are needed to buy one unit of another country's currency. Suppose the following table presents nominal exchange rate data for June 13, 2014, in terms of U.S. dollars per unit of foreign currency. Use the information in the table to answer the questions that follow. Foreign Currency Brazilian real (BRL) Canadian dollar (CAD) Euro (EUR) Japanese yen (JPY) Mexican peso (MXN) United Kingdom pound (GBP) Cost of One Unit of Foreign Currency (Dollars) 0.3666 0.8493 1.3288 0.009748 0.0889 1.8965 Suppose that on June 13, 2014, a marble statue handmade in the United Kingdom is priced at GBP 530. The approximate U.S. dollar price of the statue would be If the nominal exchange rate for the U.S. dollar-Mexican peso rises from $0.0889 to $0.10668 per Mexican peso, the Mexican peso in value, or , relative to the U.S. dollar.
Chapter20: International Finance
Section: Chapter Questions
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