Short term interest rates are 2 in Japan and 4 in the United States The current exchange rate is 120 yen per dollar If you can enter into a forward exchange rate of 115 yen per dollar, how can you arbitrage the situation ...

a Borrow 100 at 4 You will owe 104 at the end of the pe ...

Short-term interest rates are 2% in Japan and 4% in the United States. The current exchange rate

Question:

Short-term interest rates are 2% in Japan and 4% in the United States. The current is 120 yen per dollar. If you can enter into a forward of 115 yen per dollar, how can you arbitrage the situation?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...