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So I just breezed (or thought I did) through a super routine currency conversion test. The score I received was a 6/10, though I cannot for the life of me figure out which questions I got wrong, other than #7 which I noticed I read wrong.

Here are the questions and my answers. Can someone help me find out which ones I did wrong, and what I did wrong?

1) Question : If one German Mark is worth 1.23 U.S. Dollars, how many German Marks are needed to purchase 1.00 U.S. Dollar?

Student Answer: 0.813 German Marks
1.1 German Marks
1.23 German Marks
2.46 German Marks

2) Question : If one German Mark is worth 0.74 U.S. Dollars, how many German Marks are needed to purchase 1.00 U.S. Dollar?

Student Answer: 0.37 German Marks
0.74 German Marks
0.98 German Marks
1.35 German Marks

3) Question : The exchange rate is 0.87 British Pounds per U.S. Dollar. How many U.S. Dollars are needed to purchase 900 British Pounds?

Student Answer: 783 dollars
900 dollars
1034 dollars
2068 dollars

4) Question : The exchange rate is 1.67 British Pounds per U.S. Dollar. How many U.S. Dollars are needed to purchase 1,700 British Pounds?

Student Answer: 982 dollars
1018 dollars
1700 dollars
2839 dollars

5) Question : Two US Dollars = 275 Japanese Yen. If you have one US Dollar and want to exchange it for Japanese currency, how many Yen can you get for the one US Dollar?

Student Answer: 0.007 Yen
1.00 Yen
137.5 Yen
275 Yen

6) Question : The exchange rate is 0.96 Euros per U.S. Dollar. How many U.S. Dollars are needed to purchase 1,250 Euros?

Student Answer: 1,200 dollars
1,250 dollars
1,302 dollars
2,604 dollars

7) Question : Assume that one U.S. Dollar exchanges for 3 Chinese Yuans. The Dollar price for one Chinese Yuan is:

Student Answer: 0.33 Dollars per Chinese Yuan
0.67 Dollars per Chinese Yuan
1.00 Dollars per Chinese Yuan
1.33 Dollars per Chinese Yuan

8) Question : Assume that one U.S. Dollar exchanges for 12 Swiss Francs. If a new IPad costs 700 dollars, how much would it cost in Swiss Francs?

Student Answer: 12 Swiss Francs
58 Swiss Francs
700 Swiss Francs
8400 Swiss Francs

9) Question : You agree to buy 1 Sony DVD player that will cost you 12,000 Yen from a Japanese exporter (you are the US importer). Today the currency exchange rate for the Yen is 125 Yen per U.S. Dollar. You agree to pay in Yen in 90 days. At the end of the 90 days, the Japanese exporter asks for his Yen that you owe. How much will the DVD player cost you in Dollars?

Student Answer: 75 dollars
96 dollars
125 dollars
12000 dollars

10) Question : Suppose a company in the USA has a chance to sell its product internationally for either (a) 22,000 Euros or (b) 19,500 Pounds. Shipping and other costs are identical. The company will exchange its foreign currency revenues into US Dollars (USD) at current exchange rates: 1 USD = 5.20 Euros and 1 USD = 7.70 Pounds. Which statement is most accurate?

Student Answer The company receives 1,580 more USD if they make the sale in Euros.
The company receives 1,698 more USD if they make the sale in Euros.
The company receives 10,300 more USD if they make the sale in Pounds.
The company receives 1,766 more USD if they make the sale in Pounds.

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closed as too localized by Austin Mohr, Will Jagy, William, tomasz, Michael Greinecker Sep 13 '12 at 20:58

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Does the "Student Answer:" annotations mean that you selected the first given (and numerically lowest) choice for each for each and every question? Or how do we see what you answered? –  Henning Makholm Sep 7 '12 at 15:46
    
Also, at which point in time did it make sense to create a test that spoke of both Euros and German Marks? –  Henning Makholm Sep 7 '12 at 15:48

2 Answers 2

I would use the heuristic I learned in high school physics called "conversion factors".

For example if 1 mark is 1.23 USD, then the fraction $\frac{1 \mathrm{mark}}{1.23 \mathrm{USD}}$ and $\frac{1.23 \mathrm{USD}}{1 \mathrm{mark}}$ are like "1" because the top and bottom quantities are equal. Since it's basically "1" you can multiply things with it and they stay unchanged.

The first question reads: "1 USD is worth how many marks?" Multiplying by conversion factor, you are not changing the quantity, but you are changing the units:

$$1\mathrm{USD}=1\mathrm{USD}\cdot\frac{1 \mathrm{mark}}{1.23 \mathrm{USD}}=\frac{1\cdot 1 \mathrm{mark}}{1.23}=0.813 \mathrm{marks} $$

This "cancelling of units" is a good heuristic to remember which of the conversion factors to use.

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Look at number 2. A mark is worth less than a dollar; it stands to reason that it takes more than one mark to buy a dollar.

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