d) If the International Fisher Parity holds, what should be the real and nominal interest rate in Malaysia (show your calculations)? (3 marks)

e) Assume that interest rates remain unchanged in both countries for the next year. Based on the Interest Rate Parity relation calculate the expected spot exchange rate of RM per (bid and ask) one year from now. Show your calculations. (3 marks)

f) If the 1-year forward rate is currently quoted at RM5.50 - RM5.55 per , show how an arbitrageur is able to perform covered interest arbitrage with either borrowings or 1 million or RM1 million. Show your calculations. (7 marks)