Case Study: Prime Emerald Inc. is an upscale rug manufacturer in Flint, Michigan. China is the primary export option for rugs because of the reasonable price on materials and exporting. Riker Everything Antique is a popular retailer in China and has agreed to purchase 150,000 rugs for the next four years at a fixed price that is denominated in China's currency Yen. The fixed price is $Y123 per rug. The economy in China for yen currency has been staggered for the past two years and Yen has been an excess currency in the market and continues to depreciate daily. Since Prime has cash flows due to exporting to China under Yen, the value of depreciation can change the likelihood of profit for the manufacturer.

Explain the opportunities that present themselves under Locational, Triangular, and Covered Interest Arbitrage for Prime Emerald Inc.

Take into consideration that arbitrage is used as an advantage of capitalizing, but that it will be hard to capitalize when currency is depreciating.

You must explain the positions under each international arbitrage, including Locational Arbitrage, Triangular Arbitrage and Covered Interest Arbitrage.