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:

Capital Equipment

Long-lasting tools, machinery, and infrastructure utilized in the production of goods and services.

Inventory Changes

Adjustments in the quantity or value of goods that a company has in stock, which can affect financial and operational performance.

Personal Income

The total income received by individuals from all sources, including wages, dividends, and government benefits.

Corporate Income Taxes

Taxes imposed on the net income of corporations by the government.