A Japanese exporter has a 1,000,000 receivable due in one year. Spot and forward exchange rate data is given: Spot exchange rates 1-year Forward Rates Contract size $1.20=1.00$1.00=100$1.25=1.00$1.00=/12062,50012,500,000 The one-year risk free rates are is =2.25%;i=4.25%; and i=6.25%. Detail a strategy using forward contracts Borrow 959,232 today: in one year you owe 1M, which will be financed with the receivable. Convert 959,232 to dollars at spot, receive $1,151,079. Convert dollars to yen at spot, receive $115,107,910. Sell 1M forward using 16 contracts at the forward rate of $1.25 per 1. Buy 150,000,000 forward using 12 contracts, at the forward rate of $1.00=8120. Sell 1M forward using 16$^ contracts at the forward rate of $1.20 per 1. Buy 150,000,000 forward using 15 contracts, at the forward rate of $1.00 * 120. Borrow 941,176 today; in one year you owe 1M, which will be financed with the receivable. Convert 941,176 to dollars at forward rate, receive $1,176471. Convert dollars to yen at spot, receive $141,176,472