Question 19M.3.HL.TZ0.i
| Date | May 2019 | Marks available | [Maximum mark: 3] | Reference code | 19M.3.HL.TZ0.i |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | Calculate | Question number | i | Adapted from | N/A |
Tanya is a currency speculator. She buys and sells currencies with the intention of making gains as a result of changes in the exchange values of currencies. Currently, she is holding US$300 000, but she expects that in the next few months the euro (EU€) (the currency of the eurozone) will appreciate against the US dollar (US$).
At present, EU€1 = US$1.20.
Tanya exchanges her US$ for EU€.
The EU€ depreciates by 10 % against the US$. Fearing further depreciation of the EU€, Tanya exchanges her EU€ for US$.
Calculate, in US$, the loss made by Tanya as a result of these transactions.
[3]
The new exchange rate = €1 = US$1.20 × 0.9 = US$1.08
Any valid working is sufficient for [1].
€250 000 can be exchanged for 250 000 × 1.08 = US$270 000
Any valid working is sufficient for [1] (eg if an incorrectly calculated exchange rate is correctly applied to exchanging €250 000.
Loss = 270 000 − 300 000 = US$30 000
An answer of US$30 000 or 30 000 without any working is sufficient for [1].
OFR applies.
NB A simple but accurate calculation, such as “10% × 300 000 = $30 000, may be fully rewarded.
Many candidates were not able to calculate the new exchange rate correctly, but performed the rest of the calculation successfully.
