Suppose the interest rate in Japan is 1% p. a. and the interest rate in the US is 2.5% p. a. Assume borrowing and invest

[answerhappygod]

Suppose the interest rate in Japan is 1% p. a. and the interest
rate in the US is 2.5% p. a.
Assume borrowing and investing occur at these rates. The spot
rate is ¥100 per dollar and the one year ahead forward rate is ¥102
per dollar. Assume that speculator agrees to buy ¥10,000 at
the forward rate. One year later the spot rate turns out to
be ¥103 per dollar What is the profit earned by the
speculator?
$0.94
$0.97
$1.02
$1.05