You are planning to start your master studies at New York University. You have decided to buy a cozy studio apartment in Manhattan for $1.1 million. However, the apartment will be available only after 6 months due to binding lease contract. So let's assume that you have agreed to buy an apartment and pay the purchase price in 6 months from now. All your savings are currently in euros. The current level of euro money market interest rates is 1.20% and 2.60% for the dollar. The current euro-dollar exchange rate is 1.1925 EUR/USD. Questions: Explain carefully what is the direction of exchange rate risk here and how this can be mitigated using a forward contract Calculate the forward rate for a transaction that occurs after 6 months? What is the hedged price of an apartment in euros