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Kamada: UIA Japan (B). Takeshi Kamada, Credit Suisse (Tokyo), observes that the X/$ spot rate has been holding steady, and that both dollar and yen

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Kamada: UIA Japan (B). Takeshi Kamada, Credit Suisse (Tokyo), observes that the X/\$ spot rate has been holding steady, and that both dollar and yen interest rates have remained relatively fixed over the past week. Takeshi wonders it he should try an uncovered interest arbitrage (UIA) and thereby save the cost of forward cover. Many of Takeshi's research associates - and their computer models - are predicting the spot rate to remain close to $118.00/$ for the coming 180 days. Using the data below, analyze the UIA potential. The UIA profit potential is _\%, which tells Takeshi Kamada that he should borrow and invest in the yielding currency, the , to potentially gain on an uncovered basis (UIA). (Round to three decimal places and select from the drop-down menus.)

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