Jasper Pernik Is a Currency Speculator Who Enjoys "Betting" on Changes

question 84

Multiple Choice

Jasper Pernik is a currency speculator who enjoys "betting" on changes in the foreign currency exchange market. Currently the spot price for the Japanese yen is ¥129.87/$ and the 6-month forward rate is ¥128.53/$. Jasper thinks the yen will move to ¥128.00/$ in the next six months. If Jasper buys $100,000 worth of yen at today's spot price her potential gain is ________ and her potential loss is ________.

• A) $100,000; unlimited
• B) unlimited; unlimited
• C) $100,000; $100,000
• D) unlimited; $100,000

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Definitions:

Output

In economics, output refers to the total amount of goods or services produced by a firm or country.

Factor of Production

An input used in the production of goods and services, such as land, labor, capital, and entrepreneurship.

Machines

Mechanical or electronic devices that perform tasks, often complex, without human intervention.

Buildings

Structures constructed for residential, commercial, or industrial purposes.