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NAME Q2. (16 points) Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $1,000,000

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NAME Q2. (16 points) Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $1,000,000 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 Assumptions Arbitrage funds available Spot exchange rate (V/S) 1 year forward rate (W/S) US dollar interest rate Japanese Yen interest rate Value $1,000,000 104.00 100.00 1% Complete the following table to show how Takeshi can make CIA profit by borrowing_? (Vor S) and converting it to ? (or S). Start End le 15

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