Kamada: CIA Japan (A). Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $5,000,000 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. Is CIA profit possible? If so, how? Arbitrage funds available $ 5,000,000 Spot rate (\/$) 180-day forward rate (\/$) U.S. dollar annual interest rate Japanese yen annual interest rate 118.60 117.80 4.800 % 3.400 % The CIA profit potential is %, which tells Takeshi Kamada that he should borrow and invest in the higher yielding currency, , to lock in a covered interest arbitrage (CIA) profit. (Round to three decimal places and select from the drop-down menus.)