A US investor likes to invest in the foreign exchange market. After an analysis of US dollar to euro exchange rate data over the past decade, he has come up with his own model to forecast the euro:$ exchange rate one year ahead. Based on this model, the forecast for the one-year-ahead exchange rate is $1.1251 per euro. The current spot euro:$ is equal to 1.1602. The annual one-year interest rates are 0.5% in dollars and 0.75% in Europe.

a) What is the one-year forward euro:$ exchange rate?

b) If the US investor invests based on his model, which currency would he buy forward?