If a Speculator Expects That the Fed Will Intervene by Exchanging

question 32

Multiple Choice

If a speculator expects that the Fed will intervene by exchanging dollars for Japanese yen, she would most likely ____ to capitalize on this intervention.

• A)purchase yen put options
• B)sell yen futures contracts
• C)purchase yen call options
• D)buy U.S. Treasury bonds

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Definitions:

Selling Costs

All costs that are incurred to secure customer orders and get the finished product or service into the hands of the customer.

Indirect Costs

Costs that are not directly traceable to a single product or operation, such as overhead.

Opportunity Costs

The potential benefit missed out on when choosing one alternative over another.

Conversion Cost

Conversion cost is the sum of direct labor and manufacturing overhead costs incurred to convert raw materials into finished goods.