$16(20$p$6)$ Suppose today the spot rate of US to JPY is $15$S JPY per USD. and the $6-$month forward rate is $175$ JPY per USD At the same time, JP bank offers you a $1$ interest rate per year, whereas US bank offers you a $5\%$ interest rate per year. $($If you transfer $1$ million USD to JPY and hold it in JP bank for a year, then you transfer all your capital back to USD after $1$ year, how much USD will you have? $(2)$ what will the rate difference of two countries be so that it can eliminate the CIA opportunity? $(3)$ if you have no money, instead you can borrow money from the US$/$JP banks, but you have to pay an interest expense with ra

te equal to the local interest rate $+1\mathrm{.}5\%,($for example, if you borrow from US bank you need to pay $5\%$ basic interest rate $+1\mathrm{.}5\%$ prime$-6\mathrm{.}5\%$ total$).$ Can you find a strategy that benefit you?