1. The financial analyst has prepared the following information: Present spot rate : MYR13.0/100Baht 180-day forward rate : MYR13.1/100Baht The expected spot rate in 180 days : MYR13.15/100Baht Thailand interest rate per annum : 6% Malaysian interest rate per annum : 8% a. If you enter a forward contract to sell Baht, calculate the forward quotations in percentage terms (forward premium or discount) for Baht and MYR. (2 marks) b. Assume: (1) an arbitrageur is willing to borrow Baht1,300,000 or MYR169,000; (2) transaction costs are 0.1% of the initial loans. Show the calculation steps to obtain arbitrage profit (if any). (6 marks)