The Ruiz family is exchanging euros for US dollars. The exchange rate is 1 euro equals 1.35261 USD. Since the Ruiz family knows that USD are stated to the nearest hundredth of a dollar, they used the conversion ratio. Will this give the Ruiz family the correct exchange? Explain.

It will depend on how many euros they intend to convert. If they were only converting one euro they would get $1.35 whichever rate they used, but imagine it was a thousand euros .At the correct rate they would get $1352.61, at the proposed rate they would only get $1350.

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InesWalston InesWalston · Answer 2 · 2018-10-23T08:29:51-04:00

Answer-

No, the Ruiz family won't get the correct exchange rate.

Solution-

Suppose the family has 100 euros. Using the actual exchange rate, we find they have

$100\times 1.35261=\$135.261$

If we use the rate 1 euro = 1.35 USD(after rounding off), we would have

$100\times 1.35 =\$135.00$

It would seem insignificant as it is small, because it is only $0.261. But, the more money they convert with this rate, the more incorrect they will be. If they exchange 1 million euros to dollar with the rounded off rate, they will loose,

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So, they will get $2610 less while exchanging 1 million dollar, if they round off the exchange rate.