URGENT PLSSSSSS

Question 1

Samad Zain, an exchange trader wants to invest RM3,000,000 or the equivalent current at prevailing market rate. He is analyzing forex exchange opportunity between Malaysia and New Zealand. The followings are the selected information of both countries:

Country	Inflation Rate	Interest Rate
Malaysia	3.5%	4.6%
New Zealand	4.1%	6.4%

Exchange Rate

Units of foreign currency per unit of Malaysian Ringgit	Bid	Ask
N e w Zealand Dollar	$0.3889	$0.3878

Bank Negara's Forward Swap Rate (360-day): 42- 36

Note: [The calculation is to be based on four (4) decimal points to minimize rounding errors.]

Required: a. Calculate the 360-day forward exchange rate for bid and ask. (2 Marks)

b. Calculate the forward spread based on the result (a) above and identify two factors that increase this spread. (6 Marks)

Subject:international finance