5. The following quotations and expectations exist for the USD and interest rate for Malaysia and US: Present spot rate RM4/USD; 90-day forward rate RM4.15/USD Your expectation of the spot rate in 90 days RM4.10/USD US interest rate (per annum) 4%; Malaysian interest rate (per annum) 8% a. Calculate the premium or discount on the forward USD and MYR. (4 marks) b. What strategy that an arbitrageur can implement to take advantage of the situation (Covered interest arbitrage) in 90 day later? Show calculation to support your answer (2 marks) c. Assume: (1) the arbitrageur is willing to borrow USD4,000 or RM16,000 assuming no transaction costs. Show the necessary steps and calculation to get the arbitrage profit. (5 marks) d. If transaction costs are 100 (for any currency), would the arbitrage opportunity still exist for covered-interest arbitrage? Give your reason with calculation. (1 mark)