answer questions below (a) 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. Find his arbitrage profit in USD and YEN. Show all the steps involved in the arbitrage. Assumptions Arbitrage funds available spot rate (S) 180-day forward rate (/S) Expected spot rate in 180 days (S) 180-day U.S. dollar interest rate 180-day Japanese yen interest rate Value $5,000,000 118.60 117.80 118.00 4.800% 3.400% (b) The same trader observes that the $ spot rate has been holding steady, and both dollar and yen interest rates have remained relatively fixed over the past week. He wonders if he should try an uncovered interest arbitrage (UIA) and thereby save the cost of forward cover. Many of his research associates - and their computer models are predicting the spot rate to remain close to 118.00/S for the coming 180days Using the same data as in (a), find the UIA profit in USD and YEN. Show all the -- steps involved in the arbitrage