Jeff Lawrence is a currency speculator who enjoys "betting" on changes in the foreign currency exchange market. Currently the spot price for the US dollars is US$ 0.7870/A$ and the 6-month forward rate is US$ 0.7125/A$. Jeff thinks the US dollars will move to US$ 0.7710/A$ in the next six months. If Jeff is willing to invest US$100,000:

a) What will be the outcome if Jeff performs a spot transaction?

b) What will be the outcome if Jeff buys A$ forward?

c) What will be the outcome if Jeff sells A$ forward?