Help with this finance questions please:

1. The current spot exchange rate is $1.20/ and the three-month forward rate is $1.18/. Based on your research, you expect the exchange rate to be $1.19/ in three months. Assume you have 1,000,000 available to you.

1. What is the current forward premium/discount on the ?

2. What action do you need to take to speculate on your expectation about the exchange rate? What is your profit/loss if your expectation is correct?
3. What is your profit/loss if the exchange rate is $1.175/ three months later?

1. While you were visiting Turin, Italy, you purchased a Ferrari for 135,000, payable in three months. You have enough cash at your bank in New York, which pays .35 per month compounding monthly. Currently the spot exchange rate is $1.15/ and the three month forward exchange rate is $1.14/. In Turin, the money market investment rate is 2.0% for a cumulative three month investment. There are two ways for you to pay for your Ferrari:

1. Keep your funds in the bank in the US and buy 135,000 forward

2. Buy a certain amount spot today and invest the amount in Turin for three months so that the maturity value becomes equal to 135,000.

Which method do you prefer?