2. Takeshi Kamada, a citizen of Japan, is a foreign exchange trader at Credit Suisse in Tokyo (Japan is home). He is exploring covered interest arbitrage possibilities. He wants to invest $5,000,000 or its yen equivalent in a covered interest arbitrage between U.S. dollars and Japanese Yen. He faces the following exchange rate and interest rate quotes: a. spot rate (/$) 180-day forward rate (/$) U.S. dollar interest rate Japanese yen interest rate 118.60/$ 117.80/$ 4.8% p.a. 3.4% p.a. What currency will Kamada borrow? (note: U.S. dollar is trading at a forward discount of 1.349%) (1 pt.) b. Show the steps Kamada has to take to earn covered interest arbitrage profit. Describe each action and calculation. (6 pts.) 000 00 $5,000 How much will be the profit? (1 pt.)