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c. Today is 1 August 2022. Illustrate how a Taiwanese Arbitrageur can earn risk-free profit with an attempt to earn higher nominal rate in South

c. Today is 1 August 2022. Illustrate how a Taiwanese Arbitrageur can earn risk-free profit with an attempt to earn higher nominal rate in South Africa based on the following quotation from Bank of Taiwan. Assume a 12-month investment horizon. (10 marks)

Bid Ask

S0 (NT/R): 3.95 4.05

F12/12 (NT/R): 3.80 3.96

Invest Borrow

Taiwan 1.6% p.a. 2.6%p.a.

South Africa 10% 18%

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