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Heidi Hi Jensen, a foreign exchange trader at J.P. Morgan Chase, can invest $5.055.05 million, or the foreign currency equivalent of the bank's short termfunds,

Heidi Hi Jensen, a foreign exchange trader at J.P. Morgan Chase, can invest $5.055.05 million, or the foreign currency equivalent of the bank's short termfunds, 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/$)

6.1718

3-month forward rate (kr/$)

6.1982

U.S. dollar annual interest rate

3.100

%

Danish krone annual interest rate

5.050

%

The CIA profit potential is _____%, which tells Heidi Hi Jensen that she should borrow______and invest in the higher yielding currency the______for CIA profit.

,(Round to three decimal places and select from the drop-down menus.)

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