Define rate of exchange .

A rate of exchange shows the conversion between two different currencies. It tells you how much one unit of the first currency is worth in the second, as in £1 = €1.17.

True or False? If £1 = €1.17, then one euro is worth more than one pound.

False. It takes €1.17 to match a single pound, so one euro on its own is worth less than a pound, about 85p. The larger number belongs to the currency that is worth less per unit, which is the opposite of what it looks like.

How do you find a rate of exchange from two equivalent amounts?

Divide the amount in the second currency by the amount in the base currency. That gives how much of the second currency one unit of the base currency is worth, which is exactly what a rate of exchange states.

True or False? Converting £2000 into US dollars and straight back again returns £2000, if the same rate is used both ways.

True. Multiplying by the rate and then dividing by the same rate undoes the conversion exactly. That is why the two directions are not separate rules to memorise: each one reverses the other.

National 5MathsSQAApplications of MathematicsFlashcardsFinancial SkillsRates of exchange

Rates of exchange (SQA National 5 Applications of Mathematics): Flashcards

Exam code: X844 75

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Define rate of exchange.

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Define rate of exchange.
A rate of exchange shows the conversion between two different currencies.
It tells you how much one unit of the first currency is worth in the second, as in £1 = €1.17.
Complete the two directions of a currency conversion:
You $______$ by the rate of exchange to convert from the base currency into the second one, and $______$ by it to convert back the other way.
The completed sentence is:
You multiply by the rate of exchange to convert from the base currency into the second one, and divide by it to convert back the other way.
The base currency is the one written as 1 in the rate.
The rate of exchange is £1 = €1.17. How many pounds is €75?
€75 is £64.10.
Euros are the second currency here, so you divide: $75 \div 1.17 = 64.102 . . .$
Money is written to two decimal places, giving £64.10.
True or False?
If £1 = €1.17, then one euro is worth more than one pound.
False.
It takes €1.17 to match a single pound, so one euro on its own is worth less than a pound, about 85p.
The larger number belongs to the currency that is worth less per unit, which is the opposite of what it looks like.
1 US dollar = 155.62 Japanese yen and 1 Australian dollar = 102.09 Japanese yen. What is 40 US dollars in Australian dollars?
40 US dollars is 60.97 Australian dollars.
Go through the yen one rate at a time: $40 \times 155.62 = 6224.80$ yen.
Yen is the second currency in the other rate, so divide to come back out of it: $6224.80 \div 102.09 = 60.97$ .
How do you find a rate of exchange from two equivalent amounts?
Divide the amount in the second currency by the amount in the base currency.
That gives how much of the second currency one unit of the base currency is worth, which is exactly what a rate of exchange states.
Chase changes £2000 at £1 = 1.32 US dollars, spends 500 US dollars, and converts the rest into 2996 Canadian dollars. What is the US to Canadian rate?
The rate is 1 US dollar = 1.40 Canadian dollars.
He starts with $2000 \times 1.32 = 2640$ US dollars and has $2640 - 500 = 2140$ left to change.
Dividing the Canadian amount by the US amount gives $2996 \div 2140 = 1.4$ .
True or False?
Converting £2000 into US dollars and straight back again returns £2000, if the same rate is used both ways.
True.
Multiplying by the rate and then dividing by the same rate undoes the conversion exactly.
That is why the two directions are not separate rules to memorise: each one reverses the other.

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