Problem 2: Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $5,000,000 or its yen equivalent, in a covered interest arbitrage between U.S. dollars and Japanese yen. He faced the following exchange rate and interest rate quotes. Yen Equivalent 594,000,000 Assumptions Arbitrage funds available Spot rate (\/$) 180-day forward rate (\/$) 180-day U.S. dollar interest rate (per annum) 180-day Japanese yen interest rate (per annum) Value $5,000,000 118.80 117.60 5.800% 3.400% Show how Takeshi can profit from this situation using covered arbitrage strategy and calculate his profit