5. You want to speculate in the forward market by either buying or selling 1,000,000. Suppose that the one-year forward rate is $1.10/, and the current spot rate is $1.30/. You expect the future spot rate in a year to be $1.40/, and the standard deviation of the one-year rate of appreciation of the euro relative to the dollar is 3.50%. (a) [5 Points] What contract (buying or selling) would you make to speculate in the forward market? What is your expected profit in USD? (b) [5 Points] What range covers 95% of the possible future spot rates? (Assume normality, hence 95% range being 1.96 standard deviations around the mean.) (c) [5 Points] What range covers 95% of your possible profits or losses in USD?