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Bloomberg shows the following quotes: Spot THB/USD 1-year THB/USD Forward 1-year USD Interest Rate THB/USD 24.96 THB/USD 25.64 6.125% p.a. (a) Bloomberg does not quote

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Bloomberg shows the following quotes: Spot THB/USD 1-year THB/USD Forward 1-year USD Interest Rate THB/USD 24.96 THB/USD 25.64 6.125% p.a. (a) Bloomberg does not quote a 1-year THB interest rate. Estimate the 1-year THB rate. (4 marks) (b) Suppose you can borrow and lend THB at a rate of 10% p.a. Can you make any arbitrage profit given you have USD 1 million. If so, state clearly how much profit you can generate. (6 marks)

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