If the exchange rate between the dollar and the pound (the pound price of the dollar)is currently 1.50,and is expected to be 1.35 in one year,then the expected rate of
A)depreciation of the dollar is 10%.
B)depreciation of the dollar is 15%.
C)appreciation of the dollar is 10%.
D)appreciation of the dollar is 15%.
E) none of the above

Question

Quizplus · Accepted Answer

The expected depreciation of the dollar is calculated as ((1.35 - 1.50) / 1.50) * 100%, which equals -10%. This indicates a 10% depreciation.

If the Exchange Rate Between the Dollar and the Pound