Kamada: CIA Japan (A). Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $5,050,000 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	$	5,050,000
Spot rate (/$)		118.56
180-day forward rate (/$)		117.88
U.S. dollar annual interest rate		4.808	%
Japanese yen annual interest rate		3.395	%

The CIA profit potential is 0.2592%

QUESTION 1: Takeshi Kamada generates a CIA profit of(_____) (round to three decimal places.