Suppose that the one-year interest rates of USD and NZD are 3.5% and 5.5% respectively. The NZD/USD

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Question:

Suppose that the one-year interest rates of USD and NZD are 3.5% and 5.5% respectively. The NZD/USD spot exchange rate is currently 0.6311.
a. Calculate the 10-month forward premium.
b. Show how you can make a speculation if the 3-month forward exchange rate is 0.6264. Also determine the expected profit per NZD.