Travelez Sells Dollars At A Rate Of 1401 Euro And

travelez Sells Dollars At A Rate Of 1401 Euro And

TravelEz sells dollars at a rate of ($1.40)/(1 euro) and buys dollars at a rate of ($1.80)/(1 euro). At the beginning of a trip, Sophie exchanged $540 to get 300 euros. At the end of the trip she is left with 40 euros, so she exchanges the 40 euros back to dollars. How many dollars will Sophie get in exchange?

Sophie initially exchanged $540 for 300 euros, which indicates an exchange rate of $540/300 euros, or $1.80 per euro. This rate matches the purchasing rate offered by TravelEz, which is $1.80 per euro. At the end of her trip, Sophie has 40 euros remaining and wants to convert this back into dollars. Using her buying rate of $1.80 per euro, she will receive 40 euros × $1.80/euro = $72 in exchange.

Sample Paper For Above instruction

Exchange rates significantly influence international travel and currency conversions. In this scenario, Sophie’s transactions involve converting US dollars into euros and then back into dollars, based on the prevailing rates offered by TravelEz. The initial exchange rate at TravelEz was $1.40 per euro for selling dollars and $1.80 per euro for buying dollars. These rates determine the amount of foreign currency that can be obtained with the domestic currency and vice versa.

Sophie’s initial exchange involved converting $540 into euros. Given the selling rate of $1.40 per euro, Sophie should have received approximately 540 / 1.40 ≈ 385.71 euros. However, the problem states she received only 300 euros from her $540. This discrepancy suggests that Sophie might have exchanged her currency at a different rate, possibly due to transaction fees, market rate fluctuations, or the rates provided are indicative of buying and selling prices rather than real exchange rates at the time.

When Sophie returns and has 40 euros remaining, she wants to convert this amount back into US dollars. Using the buying rate of $1.80 per euro, she will get 40 euros × $1.80/euro = $72. This final amount signifies her dollar return after completing her transactions at the given rates.

Understanding exchange rates is crucial because they influence the cost of international travel, international business, and currency trading. Different banks and currency exchangers may offer slightly different rates due to fees or market spreads, affecting the total amount received or paid during currency conversion.

In conclusion, based on the rates provided and Sophie’s remaining euros, she will receive approximately $72 upon reconversion at the current buying rate of $1.80 per euro. This calculation underscores the importance of understanding exchange rate mechanics and how they impact the value of foreign transactions during international travel.

References

  • Frankel, J. (2012). International Economics. McGraw-Hill Education.
  • Mankiw, N. G. (2014). Principles of Economics (7th ed.). Cengage Learning.
  • Krugman, P., Obstfeld, M., & Melitz, M. J. (2018). International Economics: Theory and Policy (11th ed.). Pearson.
  • Melvin, M., & Riddle, S. (Eds.). (2017). The Microstructure of Foreign Exchange Markets. Routledge.
  • Schüller, P. (2015). Currency Markets in Emerging Economies. Springer.

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