Question

Suppose that the following situation exists in the foreign exchange market: 1 Canadian dollar buys $0.80 U.S, and 1 Canadian dollar buys 5.0 Chinese yuan. How many yuan will $1 U.S. buy?

Answer 1

Answer:

6.25 yuan

Explanation:

Data provided in the question

1 Canadian dollar buys  = $0.80 U.S

1 Canadian dollar buys = 5.0 Chinese yuan

So, the $1 U.S buy number of yuan is

= Number of 1 Canadian buys in Chinese yuan÷ number of 1 Canadian dollar buys in united stated

= 5 ÷ $0.80

= 6.25 yuan

We simply applied the above formula to determine the number of yuan needed for buying $1 U.S