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

question 81

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's expectations are correct, then he could profit in the forward market by ________ and then ________.

• A) buying yen for ¥128.00/$; selling yen at ¥128.53/$
• B) buying yen for ¥128.53/$; selling yen at ¥128.00/$
• C) There is not enough information to answer this question.
• D) He could not profit in the forward market.