(a) Suppose the spot rate is 14 kwacha per dollar, and the kwacha is at a 3 month forward discount of 10% per quarter. A speculator expects the spot rate in three months to be 15.6 kwacha per dollar. how can this speculator use k250 000for speculation in the forward market?

(b) A Zambian importer is due to pay 50,000 us dollars in three months. if the 3 month forward rate is 1.5 kwacha per dollar, how can the importer hedge their foreign exchange risk? will the hedger be worse off or better off if they hedge and the spot rate in three months turns to be 15.2 kwacha per US dollar888888.