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5. Daniela is both a trader and investor in the East African Community. He has 1 million Kenya shillings that he wishes to apply as

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5. Daniela is both a trader and investor in the East African Community. He has 1 million Kenya shillings that he wishes to apply as his capital. The macroeconomic variables of the three East African Community states are shown below: (i) The negotiated forward rates are 30UGH/1KES. Daniela wishes to invest in Uganda for one year. Determine whether there will be arbitrage or disarbitrage. (2.5 Marks) (ii) Suppose Daniela changes her mind and merely wish to receive triangular arbitrage. The negotiated rate is 1.4 UGH/1 TZ. Establish Triangular Arbitrage. (2.5 Marks)

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