The current spot exchange rate is $1.6/euro and the 6-months forward rate is $1.63/euro.You think that the spot rate will be $1.62/euro in six months.Assume that you can buy or sell euro 100,000.
a)What would be your expected profit from speculating in the forward market?
b)What would be you profit if the actual spot rate in 6 months is $1.60/euro?
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