b-Takeshi Kamada generates a CIA profit of ___?___yen. by investing in the _______(higher/lower) interest rate currency, the ______(dollar/ yen), and simultaneously selling the _________(dollar/yen) proceeds forward into ______(dollar/yen) at a forward premium which does not completely negate the interest differential. (Round to two decimal places and select from the drop-down menus.)

Kamada: CIA Japan (A). Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $5,050,000 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? $ 5,050,000 Arbitrage funds available Spot rate (/$) 118.41 117.81 180-day forward rate (\/$) U.S. dollar annual interest rate Japanese yen annual interest rate 4.801 % 3.391 % ... and invest in the higher yielding currency, to lock in a covered The CIA profit potential is %, which tells Takeshi Kamada that he should borrow interest arbitrage (CIA) profit. (Round to three decimal places and select from the drop-down menus.)