Kamada: CIA Japan (A). Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $4,900,000 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 $ 4,900,000 Spot rate (W/S) 118.49 180-day forward rate (w/$) 117.82 U.S. dollar annual interest rate 4.804 % Japanese yen annual interest rate 3.395 % The CIA profit potential is - 0.272 %, 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. (Round to two decimal places and select from the drop-down menus.)