Suppose that the six-month interest rates in the US (domestie rate 22 points) 03)e (foreign rate) are, respectively, 1.5% and 0.5%. The 6-month forward exchange rate was $1.19/Euro. Suppose that the spot price of the euro is $1.20/Euro. a. Calculate the 6-month theoretical Forward rate? (2 points) b. Is the forward rate underpriced or overpriced? (2 points) c. Based on your answers, should you long or short the Forward contract? (2 points) d. What should you do today? Borrow $50M or 50M euros