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:

Comparative Balance Sheet

A financial statement that presents a company's financial position at different times, side by side, to allow for performance comparison.

Cash Dividends

Payments made by a company from its earnings to its shareholders in the form of cash.

Operating Activities

Comprises the primary activities of a business that relate to providing goods and services, generating revenue, and paying expenses.

Comparative Balance Sheet

A financial statement that presents a company's financial position at different points in time side-by-side to assess changes in assets, liabilities, and equity.