international investment

4. [10 points] Chicago Co. has obtained spot rate quotations from three banks in Thailand: Minzu Bank, Sobat Bank and Siam bank, located in Bangkok. The bid and ask prices of Thai baht for each bank are displayed in the table below: Table 1 Bid and Ask Prices of Thai baht Minzu Bank Sobat Bank Siam Bank Bid $0.0224 $0.0228 $0.0226 Ask $0.0227 $0.0229 $0.0228 Are these quotes reasonable? If they are not reasonable, determine the profit you could generate by withdrawing $100,000 from your checking account and engaging in arbitrage before the rates are adjusted. 5. [15 points] Please write down the steps that you would need to follow in order to speculate on expected movements in the baht's value over the next 30 days. Also show the speculative profit (in dollars) resulting from the scenario (The baht would move from a current level of $0.022 (baht:S=0.022) to S0.020 within the next 30 days). Assume that you can borrow either $10,000 or the baht equivalent of this amount. Furthermore, assume that the following short-term interest rates (annualized) are available to you: Table 2 Short-Term Interest Rates Currency Lending Rate Borrowing Rate Dollars 8.1% 8.2% Thai baht 14.8% 15.4%