Kamada: CIA Japan (A). Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered

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Kamada: CIA Japan (A). Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities.

He wants to invest $5,000,000 or its yen equivalent in a covered interest arbitrage between U.S. dollars and Japanese yen. He faced the following exchange rate and interest rate quotes. Is CIA profit possible?

If so, how?

Arbitrage funds available $5,000,000 Spot rate (¥/$) 118.60 180-day forward rate (¥/$) 117.80 180-day U.S. dollar interest rate 4.800%

180-day Japanese yen interest rate 3.400%

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Multinational Business Finance

ISBN: 9781292270081

15th Global Edition

Authors: David Eiteman, Arthur Stonehill, Michael Moffett

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Question Posted: Jun 04, 2024 02:12 AM

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Kamada: CIA Japan (A). Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered

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Multinational Business Finance

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