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

$4.954.95

million, or the foreign currency equivalent of the bank's short term funds, in a covered interest arbitrage with Denmark. She is now evaluating the arbitrage profit potential in the same market after interest rates change. (Note that anytime the difference in interest rates does not exactly equal the forward premium, it must be possible to make CIA profit one way or another.)

Arbitrage funds available	$	4,950,000
Spot exchange rate (kr/$)		6.1716
3-month forward rate (kr/$)		6.1985
US dollar annual interest rate		3.100	%
Danish kroner annual interest rate		5.900	%

The CIA profit potential is

_______%, ?

which tells Heidi Hi Jensen that she should borrow

Danish krone

U.S. dollars

and invest in the

higher

lower

interest rate currency,

the dollar

the krone

, gaining on the re-exchange of kroner for dollars at the end of the period.(Round to three decimal places and select from the drop-down menus.)The CIA profit amount is

$nothing.

(Round to the nearest cent.)