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Exchanging Currency (p.45)
Having a basic understanding of how exchange rates work is important
not just for vacations to foreign countries, but also for businesses
that deal with importing, exporting or foreign clients. Nowadays, as
well, people often do their shopping online and prices are frequently
different currencies, so you need to be able to figure out just how
much it is.
When you are exchanging money, you are actually buying it for a price.
The bank or other financial institution adjusts its rates so that
whether you are buying foreign currency or changing it back to
Canadian funds, you are paying a fee to the bank.
Bank Buy Rate: The rate at which the bank will BUY FOREIGN
currency from you
Bank Sell Rate: The rate at which the bank will SELL FOREIGN
currency to you.
In order to calculate exchange rate problems properly, you need to
ask yourself 2 questions every time:
1. Do I use the bank buy rate or the bank sell rate?
You use the bank buy rate when the bank is buying foreign currency
off you. That is, you walk into the bank with foreign currency.
You use the bank sell rate when the bank is selling foreign currency to
you. That is, you walk into the bank with Canadian currency.
2. Do I multiply or divide?
You multiply when the currency that is given in the question is foreign
You divide when the currency given in the question is Canadian.
Example 1) Christine has €2000 (euros) that she wants to convert to
Canadian funds. How much will she get?
1. Which rate do I use?
2. Do I multiply or divide?
Example 2) Pat Oka is going to Japan. She has $850 CAD saved up.
How many yen will she have to spend in Japan?
1. Which rate do I use?
2. Do I multiply or divide?
Example 3) Meeka O’Toole is going to Switzerland in 3 months. He
needs 300 Swiss francs in spending money. How much does he have to
save up in Canadian dollars before he goes?
1. Which rate do I use?
2. Do I multiply or divide?
Example 4) Shirley has some British pounds (£) left over from her
trip to the United Kingdom. She is strapped for cash to buy a new pair
of boots for $150 CAD. How many British pounds does she need to
exchange in order to be able to afford her boots?
Exercise on Exchanging Currencies
1. Use the Bank buy rate to exchange the following funds:
a. $850 CAD (Canadian dollars) to Danish krone
b. €2300 to CAD
c. £1200 to CAD
d. $4690 CAD to USD (US dollars)
e. $700 CAD to AUD (Australian dollars)
f. $550 SGD (Singapore dollars) to CAD
2. Use the bank sell rate to exchange the following funds:
a. $600 CAD to Swiss francs
b. 20 000 yen (Japan) to CAD
c. $5000 to Swedish krone
d. 400 Brazilian real to CAD
3. You have 4 foreign exchange students in your school. Juan from Mexico, Jesu
from Brazil, William from Scotland, and Kristian from Sweden. They have each
brought the following amounts from home. How much money do each of them have
in Canadian dollars?
a. 6000 pesos
b. 4000 real
c. £800
d. 3000 krone
4. Rebecca is planning a trip to Germany. She has $1400 CAD saved up for her trip.
How much will she have in euros to spend in Germany?
5. You are planning a trip around the world. You will need the amounts listed in the
table in each country. How much money do you need to save up? (Copy out the
table)
How much you need in
Exchange rate:
How much you in CAD:
Foreign currency:
£2000
$1200 USD
$900 AUD
€ 5500
20 000 pesos
$ 800 SGD
Total:
6. You are taking 6 packets of twelve thousand dollars Canadian to the bank to
exchange into foreign currency. Change the twelve thousand packets to each of
the following foreign currencies:
Canadian Currency:
Exchange rate:
How much you will have in foreign
currency:
$12 000 CAD
(pounds)
$12 000 CAD
(euros)
$12 000 CAD
(Danish krone)
$12 000 CAD
(Japanese Yen)
$12 000 CAD
(Swiss francs)
$12 000 CAD
(Australian dollars)
7. Now you bring the foreign currency back to the bank the next day and exchange it
back to Canadian dollars.
How much you have in
Exchange rate:
How much you will have in Canadian
foreign currency:
Currency:
(pounds)
(euros)
(Danish krone)
(Japanese Yen)
(Swiss francs)
(Australian dollars)
8. Did you get the same amount back after both exchanges? Explain why or why not.
Exchanging Currency p.45
Having a basic understanding of how exchange rates work is important
not just for vacations to foreign countries, but also for businesses
that deal with importing, exporting or foreign clients. Nowadays, as
well, people often do their shopping online and prices are frequently
different currencies, so you need to be able to figure out just how
much it is.
When you are exchanging money, you are actually buying it for a price.
The bank or other financial institution adjusts its rates so that
whether you are buying foreign currency or changing it back to
Canadian funds, you are paying a fee to the bank.
Bank Buy Rate: The rate at which the bank will _____________
currency from you
Bank Sell Rate: The rate at which the bank will _____________
currency to you.
In order to calculate exchange rate problems properly, you need to
ask yourself 2 questions every time:
1. Do I use the bank buy rate or the bank sell rate?
--You use the bank ____________ when the bank is ________
foreign currency off you. That is, you walk into the bank with
___________currency.
--You use the bank __________ when the bank is _________foreign
currency to you. That is, you walk into the bank with
___________currency.
2. Do I multiply or divide?
You multiply when the currency that is given in the question is foreign
You divide when the currency given in the question is Canadian.
Example 1) Christine has €2000 (euros) that she wants to convert to
Canadian funds. How much will she get?
1. Which rate do I use?
2. Do I multiply or divide?
Example 2) Pat Oka is going to Japan. She has $850 CAD saved up.
How many yen will she have to spend in Japan?
1. Which rate do I use?
2. Do I multiply or divide?
Example 3) Meeka O’Toole is going to Switzerland in 3 months. He
needs 300 Swiss francs in spending money. How much does he have to
save up in Canadian dollars before he goes?
1. Which rate do I use?
2. Do I multiply or divide?
Example 4) Shirley has some British pounds (£) left over from her
trip to the United Kingdom. She is strapped for cash to buy a new pair
of boots for $150 CAD. How many British pounds does she need to
exchange in order to be able to afford her boots?
Exercises on Exchanging Currencies
1. Use the Bank buy rate to exchange the following funds: Will you multiply or
divide?
a. $850 CAD (Canadian dollars) to Danish krone
b. €2300 (euros) to CAD
c. £1200 (British pounds sterling) to CAD
d. $700 CAD to AUD (Australian dollars)
2. Use the bank sell rate to exchange the following funds: Will you multiply or
divide?
a. $600 CAD to Swiss francs
b. 20 000 yen (Japan) to CAD
c. $5000 to Swedish krone
d. 400 Brazilian real to CAD
3. Determine if you will use the bank buy rate or the bank sell rate for each of the
following:
a. You bring $500 American to exchange for Canadian
b. You bring $300 CAD to exchange for Kenyan shillings
c. You bring ₤450 Egyptian pounds to exchange for Canadian
d. You bring Pakistani rupee to exchange for Canadian
e. You bring Canadian to exchange for AUD (Australian dollars)
4. Determine if you will multiply or divide the following:
a. I have $500 CAD and want to get yen for my trip to Japan
b. I have 350 000 Korean Won and need to exchange for Canadian money
c. I have $300 American and want to exchange for Canadian money
d. I have $600 Canadian and want to exchange for Mexican pesos
e. I have Canadian money and need €500 (euros)
f. I have British pounds and need $400 CAD
5. You have 4 foreign exchange students in your school. Juan from Mexico, Jesu
from Brazil, William from Scotland, and Kristian from Sweden. They have each
brought the following amounts from home. How much money does each of them
have in Canadian dollars?
a. Do you use the bank buy rate or sell rate?
b. Do you divide or multiply?
c. 6000 pesos
d. 4000 real
e. £800
f. 3000 Danish krone
6. Rebecca is planning a trip to Germany. She has $1400 CAD saved up for her trip.
How much will she have in euros to spend in Germany? Do you use the buy rate or
the sell rate? Do you multiply or divide?
7. You just got back to Canada from a trip to Switzerland and need to buy new hiking
boots to replace the ones you destroyed. You have a lot of leftover Swiss Francs
and no Canadian money. How many Swiss Francs do you need to bring to the bank
to exchange if the boots cost $150.00 CAD?
8. You are planning a trip around the world. You will need the amounts listed in the
table in each country. How much money do you need to save up?
How much you need in
Rate:
Multiply or Divide: How much you need in CAD:
Foreign currency:
(buy or sell?)
£2000 (British)
$1200 USD (U.S.)
$900 AUD (Australia)
€ 5500 (euros)
20 000 pesos (Mexico)
$ 800 SGD (Singapore)
Total: