The current spot exchange rate is $1.06/CAD, and the 3-month forward rate is $1.20/ CAD.

a) If you speculate that the future spot rate in 3 months will be $1.10/CAD. What kind of position (long/short) that you would like to enter in the forward market?

Answer: You would like to enter a _______ (long/short) position in the forward contract.

b) What is your expected profit in USD? Suppose that you can buy or sell CAD 100,000.

Answer: Your expected profit will be $________

c) At expiration, the spot price turns out to be $1.25/ CAD. Do you profit or do you lose at maturity date? What is the size of your profit/loss in USD?

Answer: You ______ (profit/lose). The size of your total profit/loss is $ _______ (please calculate your profit/loss in USD and use negative sign to indicate loss)