b) In Malaysia, the spot exchange rate is quoted at RM3.1000/20US$ and RM3.8500/15/

If the /RM spot rate were quoted at 0.2602/24/RM in Germany, determine the ways an arbitrageur trade in order to make profit. (Note: Show all calculation) (6 marks)

c) Given that the British pounds spot rate is US$1.6923 and that the UK and US one year interest rates are initially the same at 3.5%. Assume that the UK one-year interest rate increases by 0.5%, while the US one-year interest rate remains unchanged. Applying the International Fisher Effect (IFE) theory, forecast the spot rate one year ahead. (3 marks)