1. 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/$)

Spot 4.0040 3-month forward 3.9690

Ask (MR/$)

4.0200 3.9888

1. 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.
2. Verifyyouranswertopart(a).withahypotheticalinvestmentof$10million for three months in each country. Use only ask quotes for simplicity and ignore other fees, charges, and taxes.