As an individual investor in Malaysia, you believe the main index of Malaysia stock market, FBM KLCI (FTSE Bursa Malaysia KLCI) would decline further in the year of 2022. The FTSE Bursa Malaysia KLCI (FBMKLCI) comprises the largest 30 companies listed on the Main Board by full market capitalisation that meet the eligibility requirements of the FTSE Bursa Malaysia Ground Rules.

Given strong belief in that market trend, you aim to make a significant capital gain from the financial exchanges in Malaysia. Based on this module content outline, suggest TWO  suitable financial instruments (ie any specific equity-based, debt-based or neither debt-based nor equity-based of financial instruments) and Explain in detail on how you would apply that financial instruments in order to meet your objective effectively and efficiently. 

Recently, your friend who owns a multinational corporation in Malaysia has just bought fabrics from a U.S. company, with payment of $1 million due in 6 months. Assuming today is 20 April 2022, given the current spot rate (MYR/USD) is MYR/USD 4.3103-221, the six-month forward rate is MYR/USD 4.4252-70. Due to the impacts of the Malaysian stock market performance on value of MYR, you expect the spot rate to reach MYR/USD 4.4340-57 in coming six months.

Calculate the implicit gains or losses on this forward position in MYR. 

Answer rating: 100% (QA)

Here are the financial instruments you can use to profit from the downturn in the Malaysian market P... View the full answer