You have bid for a possible export order that would provide a cash inflow of €1 million in 1 year. The spot exchange rate is $0.9644/€ and the 1-year forward rate is $0.9503/€. There are two sources of uncertainty: (1) the euro could appreciate to $1.00/€ or depreciate to $0.90/€, and (2) you may or may not receive the export order. Illustrate in each case the profits or losses that you would make if you sell €1 million forward.
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