Kamada: CIA Japan $($A$).$ Takeshi Kamada, a foreign exchange trader at Credit Kamada: CIA Japan $($A$).$ Takeshi Kamada, a foreign exchange trader at Credit

Suisse $($Tokyo$),$ is exploring covered interest arbitrage possibilities. He wants to invest

$$5,100,000$ 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:

profit possible? If so$,$ how?

The CIA profit potential is $-0\mathrm{.}1899\%,$ which tells Takeshi Kamada that he should borrow

the Japanese yen and invest in the higher yielding currency, the U$.$S$.$dollar $,$ to lock in a

covered interest arbitrage $($CIA$)$ profit. $($Round to three decimal places and select from

the drop$-$down menus.$)$

Takeshi Kamada generates a CIA profit of $Y$ by investing in the interest

rate currency, the

$,$ and simultaneously selling the

proceeds forward into

at a forward premium which does not completely negate the interest differential.

Suisse $($Tokyo$),$ is exploring covered interest arbitrage possibilities. He wants to invest

$$5,100,000$ 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:

profit possible? If so$,$ how?

The CIA profit potential is $-0\mathrm{.}1899\%,$ which tells Takeshi Kamada that he should borrow

the Japanese yen and invest in the higher yielding currency, the U$.$S$.$dollar $,$ to lock in a

covered interest arbitrage $($CIA$)$ profit. $($Round to three decimal places and select from

the drop$-$down menus.$)$

Takeshi Kamada generates a CIA profit of $Y$ by investing in the interest

rate currency, the

$,$ and simultaneously selling the

proceeds forward into

at a forward premium which does not completely negate the interest differential.