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Same Question - 2 answers?

Hello

I have recieved these questions and answers on a revision pack, but i just wanted to know if anyone knew the reasoning why for 'a' it gets divided by the orignal value yet 'b' gets divided by the new value:

a) If the spot rate changes from $0.11 per peso to $0.10 per peso over a one year period, what is the percentafe change in the value of the Mexican peso?

Percentage change = (0.10-0.11)/011 = -0.09

b) If the spot rate changes from Mex$10.00 per dollar to Mex$9.00, what is the percentage change in the value of the Mexican perso?

Percentage change = (10.00-9.00)/9.00 = 0.11

THanks for your help

Reply 1

Planto

The second question is in pesos per dollar, the first is in dollars per peso. So the second is equivalent to asking:

"If the spot rate changes from $1/10 per peso to $1/9, what is the percentage change in the value of the Mexican peso?"