topic - (triangular arbitrage)

1a .. What is a triangular arbitrage?

1(b) Given the following exchange rate in Kuala Lumpur and Canberra:

USD/MYR = 4.2100 (Kuala Lumpur)

AUD/MYR = 2.8500 (Kuala Lumpur)

USD/AUD = 1.3529 (Canberra)

i. Determine if there is any arbitrage opportunities.

ii. Calculate the profit/ (loss) from the above triangular arbitrage assuming your

investment start with MYR 3,000,000.00.

topic - (futures contract and forward contract.)

2 ..Laudent Bhd is expecting a huge production of Crude Palm Oil in March 2019. They

forecast that the Crude Palm Oil price is going to plunge. Hence, they entered into 10

Short March 2019 Futures Crude Palm Oil (FCPO) contracts priced at MYR 2,300.

Each contract consist of 25 metric tons. In March, the actual price in the market is MYR

2,110.

i. What is the purpose of Laudent Bhd entering into futures market in the above

situation?

ii. Calculate the amount of profit / (loss) from the above should the company

proceeds with the physical settlement.