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

question 15

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 $100,000 worth of yen at today's spot price and sells within the next six months at ¥128/$, he will earn a profit of:

• A) $146.09.
• B) $101,460.94.
• C) $1460.94.
• D) nothing; he will lose money

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Definitions:

Cash Dividend

A financial disbursement by a corporation to its stockholders, typically from earnings distribution.

Sales Adjusted

A metric reflecting changes or modifications to sales figures for purposes such as accounting adjustments or performance analysis.

Cost of Goods Sold

The direct costs tied to the production of the goods sold by a company, including direct labor, materials, and manufacturing overhead.

Direct Method

A cash flow statement preparation approach that lists major classes of gross cash receipts and payments.