Which of the following accurately explains what an exchange rate of 1:20 between the Canadian dollar and Japanese yen means? A. It takes only one Canadian dollar to buy twenty Japanese yen. B. Japanese yen are twenty times more valuable than Canadian dollars. C. Prices for goods and services are lower in Canada than in Japan. D. It takes only one Japanese yen to buy twenty Canadian dollars.

A. It takes only one Canadian dollar to buy twenty Japanese yen.

Explanation:

For example, let's say that a Canadian want to purchase a good from Japanese through yen which sot 500 Yen.

That Canadian require a :

500 / 20 = 25 Canadian dollar in order to purchase the goods.

Keep in mind that Currency which possess rate does not necessarily mean that the currency has more value. In order to see which currency has more value, you need to compare it with its purchasing power.

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