A foreign exchange dealer in Tokyo provides the following quotes for spot exchange and 3-month forward exchange between the Malaysian ringgit (MR) and the U.S. dollar.

Bid (MR/$) Ask (MR/$)

Spot 4.0040 4.0200 3-month forward 3.9690 3.9888

a. In New York, 3-month U.S. Treasury bills yield 7 percent per annum. What should be the annualized yield on 3-month Malaysian government bills? Use U.S. dollar ask quotes for simplicity.

b. Verify your answer to part (a). with a hypothetical investment of $10 million for three months in each country. Use only ask quotes for simplicity and ignore other fees, charges, and taxes.