Business Degree Certification Practice Test

Based on the provided exchange rates, which statement is correct regarding the South African rand on Thursday?

1. One U.S. dollar was equal to 0.1023 South African rand.

2. One Thai baht was equal to $35.21.

3. The South African rand depreciated against the U.S. dollar.

4. The South African rand appreciated from Thursday to Friday.

The correct answer is: One U.S. dollar was equal to 0.1023 South African rand.

The statement regarding one U.S. dollar being equal to 0.1023 South African rand accurately reflects the basic principle of foreign exchange rates. Typically, exchange rates are expressed in terms of how much of one currency is equivalent to another. If we consider the sequence of a statement indicating that one U.S. dollar equals an amount of South African rand, it suggests a misunderstanding of the currency valuation, as typically, it’s expressed in the opposite direction. In cases where the South African rand is involved, one can expect the exchange rate to be listed as a number of rand per U.S. dollar. For instance, if one U.S. dollar equals a certain number of South African rand, then the value should be a greater number than one for the rand's typical valuation. Therefore, it is crucial to take into account that exchange rates present a picture of how much one unit of currency can obtain in another currency. The other possible statements either lack clarity concerning the correct relationship or provide an incorrect depiction of the currency's performance over time. The depreciation of a currency would mean that it takes more rand to purchase dollars, which does not correspond with the information about the rand mentioned in the correct statement. Similarly, statements about appreciation would require specific exchange rate