Problem FORW-79B LR2023-10 Today is "time 0 ". In what follows, we regard the dollar as the domestic currency and the pound as the foreign currency. It is given that - The exchange rate is 1.8 dollars/pound. That is, one pound costs $1.8. - A dollar-denominated zero-coupon bond (with $1 face value) maturing in 300 days costs $0.9750. - A pound-denominated zero-coupon bond (with 1 face value) maturing in 300 days costs 0.9500. That is: What is D ? (a) What should be the time- 0 value of a dollar-denominated forward contract on 1, expiring 300 days from now, where the delivery price (fixed price) paid at that time is $2.00 ? (Show work. Be exact to within .0001 at least.) This is not a 0 -downpayment forward contract. (b) For a forward contract on 1 as in part (a), explain how its payoff can be replicated by a position (investment strategy) in the foreign bond and in the domestic bond. If you prefer, you can use lending/borrowing instead of buying/selling bonds