Stretching the payable and paying on day

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Reference no: EM131993455

1. Judy 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/$. Judy thinks the yen will move to ¥128.00/$ in the next six months. If Judy's expectations are correct, then she could profit in the forward market by ________ and then ________.

a. She could not profit in the forward market.

b. There is not enough information to answer this question.

c. buying yen for ¥128.53/$; selling yen at ¥128.00/$

d. buying yen for ¥128.00/$; selling yen at ¥128.53/$

2. What is the APR cost of skipping the discount on purchases that have terms of 1.5/12, net 35, and "stretching the payable," and paying on day 60?

a. 6.1448%

b. 6.3047%

c. 7.6194%

d. 7.6810%

e. 7.9421%

f. 9.2640%

g. 9.6300%

h. 11.1168%

i. 11.5799%

j. 11.6646%

k. 12.1791%

l. 15.5187%

m. 15.8811%

n. 16.6053%

o. 17.0714%

p. 18.4343%

q. 20.1317%

r. 24.1669%

s. 27.1054%

t. none of the above

Reference no: EM131993455

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