Question: QUESTION 3 (Topic 6: Parity Relationship) a) As a forex dealer, you think that you have an opportunity to perform covered interest arbitrage (CIA) based

QUESTION 3 (Topic 6: Parity Relationship) a) As a forex dealer, you think that you have an opportunity to perform covered interest arbitrage (CIA) based on the information provided below: Exchange rates Spot SGD/MYR3 1620 3 months forward SGD/MYR3.1788 /3 months Interest rates Singapore 1.75 percent Malaysia 2.50 percent If you can borrow or invest MYR2 million now, show your CIA steps and how much would the interest arbitrage profit be. (8 marks)

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