Copenhagen Covered (A). Heidi Hi Jensen, a foreign exchange trader at J.P. Morgan Chase, can invest

$5.05

million, or the foreign currency equivalent of the bank's short term funds, in a covered interest arbitrage with Denmark. Using the following quotes, can Heidi make a covered interest arbitrage (CIA) profit?

Arbitrage funds available	$	5,050,000
Spot exchange rate (kr/$)		6.1719
3-month forward rate (kr/$)		6.1977
U.S. dollar annual interest rate		3.100	%
Danish krone annual interest rate		4.900	%

The CIA profit potential is

0.1350.135%,

which tells Heidi Hi Jensen that she should borrow

U.S. dollars

and invest in the higher yielding currency the

Danish krone

, for CIA profit. (Round to three decimal places and select from the drop-down menus.)Heidi Hi Jensen generates a covered interest arbitrage (CIA) profit of

$enter your response here.

(Round to the nearest cent.)