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October 31, 2014

Homework Help: money conversion problem

Posted by linda on Tuesday, January 22, 2013 at 3:01pm.

I have a currency conversion problem that I have found difficult to solve.

Suppose that a currency speculator believes that as time goes on the exchange rate is going to fall. On November 1st the speculator converts $1,000 US into Canadian dollars (just call the converted amount C) and sets that money aside for a period of one month.

On December first, the exchange rate has fallen to 1.2501 and the speculator converts those C Canadian dollars back into US dollars.

How much does she have in US dollars on December 1st? How much money has she made in her speculation? [keep in mind that the conversion rate that is given is for converting from US to Canadian dollars, not from Canadian to US dollars.]

Thank you

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