Golden Ounce. Under the gold standard, the price of an ounce of gold in U.S. dollars was $20.62, while the price of that same ounce in British pounds was £3.8565. What would bethe exchange rate between the dollar and the pound if the U.S. dollar price had been $42.83 per ounce of gold?CThe implied $/£ exchange rate if the U.S. dollar price is $20.62/oz of gold is $£. (Round to four decimal places.)The implied $/£ exchange rate if the U.S. dollar price had been $42.83/oz of gold is $£. (Round to four decimal places.)

The implied $/£ exchange rate if the U.S. dollar price is $20.62/oz of gold is $£. (Round to four decimal places.) The implied $/£ exchange rate if the U.S. dollar price had been $42.83/oz of gold is $£. (Round to four decimal places.)

The implied $/£ exchange rate if the U.S. dollar price is $20.62/oz of gold is $£. (Round to four decimal places.) The implied $/£ exchange rate if the U.S. dollar price had been $42.83/oz of gold is $£. (Round to four decimal places.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Instruments of Foreign Exchange Market

Foreign exchange is a worldwide market in which one nation’s currency is converted into another nation’s currency. In further terms, exchanging of nations currency with foreign currencies. Foreign exchange happens at a specified rate which is termed the foreign exchange rate. The exchange rates are not constant continuously changing as they are derived by market forces of supply and demand. Widely used foreign currencies are the United States- dollar, Euro, Japanese Yen, British pound, and Australian dollar. US- dollar is the most denominated foreign currency. The Euro to US dollar is a widely used currency pair in the forex market as these two currencies represent the world’s enormous economy. Forex trade is simple as exchanging currencies at the bank. The main players of forex markets are the central banks, financial institutions, intermediaries, investments banks, and other banks. Central Bank is the supreme player who decides the currency value of their own nation on the forex market. Mostly foreign exchange-traded at FX market (forex market) when tourists’ visits a foreign country, import, and export happens between two countries.

Question

Golden Ounce. Under the gold standard, the price of an ounce of gold in U.S. dollars was $20.62, while the price of that same ounce in British pounds was £3.8565. What would be
the exchange rate between the dollar and the pound if the U.S. dollar price had been $42.83 per ounce of gold?
C
The implied $/£ exchange rate if the U.S. dollar price is $20.62/oz of gold is $£. (Round to four decimal places.)
The implied $/£ exchange rate if the U.S. dollar price had been $42.83/oz of gold is $£. (Round to four decimal places.)

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