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Q4 The following information was available Spot rate for Japanese yen: 730 day forward rate for Japanese yen: (assume a 365 day year) The US risk free rate The Japanese risk free rate Points 1 a) assuming annual compounding, what is the expected 730 day forward rate. 1 b) Based on the value determined in part a, is there an arbitrage opportunity? 2 c) if the answer in part b was yes, describe the arbitrage strategy. Assume you have the ability to borrow either 100 mm yen or 1mm US dollars. Based on this, what is the total profit and the currency of that profit? Strategy: Total profit, including the currency of the profit: 2 6 must show work to get full credit 0.009313 $/yen 0.010475 $/yen 0.07 0.01 730 day spot rate forward Japanese $/JY rate US rf rate rf rate 0.009313 0.010475 0.07 0.01