ou have the following information: the current exchange rate is SGD 0.40/ MYR. Meanwhile, the SGD 0.3907/ MYR of the three-month forward exchange rate. The interest rate of three- month is 5.6 percent per year in RB Malaysia. The interest rate of three-month is S.4 percent per year in CBC Singapore. Assume that you can borrow up to MYR1.000.000. (a) Assuming that you want to realize profit in terms of Ringgit Malaysia/SGD,determine the size of your arbitrage profits. b) Assume that you want to realize profit in terms of Singaporean Dollar. Thow the covered arbitrage process and determine the arbitrage profit in S

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.