If You Buy Yen Forward When the Yen Is Selling

question 26

Multiple Choice

If you buy yen forward when the yen is selling at a forward premium,you will get:

• A) more yen than if you buy on spot market.
• B) fewer yen than if you buy on spot market.
• C) the same number of yen as on the spot market, but with a lower commission.
• D) the expectation of more yen, but the difference is not locked in.

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Definitions:

Natural Resources

Naturally occurring materials or commodities valuable to humans, such as water, minerals, and forests.

Plant Assets

Long-term tangible assets used in the operation of a business that are not intended for sale.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.

Depletion

The allocation of the cost of wearing down or using up natural resources over the period they are extracted or consumed.