Problem 2. (50 Points) At the present, the spot exchange rate of the British pound () is quoted at $1.20 per British pound and the 6-month forward exchange rate is quoted at $1.23 per British pound. Yet to some traders or investors, the future spot exchange rate is expected to rise to $1.25 per British pound six months from now, 1. Is the British pound trading at a six-month forward premium or discount? What is the forward premium or discount? Show your calculations. (10 pts) a 2. At the present, is there a six-month risk premium or discount for investors to hold pound- denominated assets? What is the risk premium or discount? Show your calculations. (10 pts) 3. Explain how a speculator may profit at no cost within six months by engaging in speculative trading activities. You must clearly specify what trading activities must be undertaken at the present and six months from now. For the purpose of your explanations, you are required to demonstrate your trading activities by presuming that you want to speculate on one British pound (In fact, you can speculate on any quantity of British pounds)(30pts)