Question 3 (Total 13 marks) Assume that the current spot exchange rate is MYR3.0300/AUD, the possible values for the rate of change of the MYR/AUD spot exchange rate for 90 days are observed as follows: Probability 20% Possible rate of change 10% 50% 30% 5% -10% a) Compute the expected future spot exchange rate at 90 days. [3 marks] b) Compute its standard deviation and the range of the future spot exchange rate within 1o. [7 marks] c) Assume the 90-day forward rate offered in the market is MYR3.3500/AUD. Justify if the unbiased forward hypothesis holds or not, and make a corresponding suggestion of the arbitrage strategy if required. [3 marks]