Question $2$

Kemal Yasar speculates on the currencies in the foreign currency exchange market. Currently the spot price for the Polish zloty$/$US dollar is Zl$439\mathrm{.}47/$$ and the $4-$month forward rate is Zl$441\mathrm{.}44/$$$.$ Kemal expects the Polish zloty$/$US dollar will move to $Zl\frac{441\mathrm{.}54}{\text{\$}}$ in the next four months.

a$.$ What should Kemal do$?$ If Kemal has $$400000,$ explain how much he can earn as profit in dollars? Show calculations.

b$.$ Specify the transaction such as buy$/$sell at forward$/$spot$/$expected future spot rate. Compare the risk level of possible transactions.