Question 4

(a)Assume that you are the treasurer of KIWI Berhad which has an extra cash reserve of MYR1,000,000 to invest in Germany for six months. The following information is given.

Assume a 360 day-year and no transaction costs or taxes

Required:

Recommend to KIWI Berhad the country in which the company should invest the extra cash

Support your answer with transaction flows and relevant calculations including the arbitrage profit/loss in Malavsian ringgit.

(b) Myanmar should take "more concrete and more vigorous" measures to ensure the safety of Chinese citizens and companies there. Chinese foreion ministry spokesman Zhao Lian said during a daily news briefing on Wednesdav

(Source: Theedge Malaysia; March 17, 2021)

Discuss how the Myanmar coup in 2021 may affect foreign direct investments and the economy of Myanmar.

\begin{tabular}{|l|l|} \hline Current spot exchange rate & MYR4.7600/EUR \\ \hline Six-month forward exchange rate & MYR4.6520/EUR \\ \hline Interest rate in Germany & 5% per annum \\ \hline Interest rate in Malaysia & 4% per annum \\ \hline \end{tabular}