Suppose you believe that the pound will depreciate versus the U.S. dollar in the coming six-month period. The current spot rate is $1.30/, and the three-month forward rate is $1.32/. You expect the spot rate to fall to $1.27/ in six months. You can make transactions up to 100,000. Please answer the following questions.

1. How should you speculate with forward contracts?

2.Calculate your projected profit based on your decision made in part 1.