QUESTION 1 Takeshi Kamada, Credit Suisse (Tokyo), observes that the V/S spot rate has been holding steady, and both dollar and yen interest rates have remained relatively fixed over the past week. Takeshi wonders if 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 X118.00/5 for the coming 180 days. Using the same data as in the previous problem, analyze the UIA potential. What is the CIA profit potential? IX.XXXX) - do not include the % sign QUESTION 3 Heidi Hoi Jensen is again valuating the arbitrage profit potential in the same market after another change in interest rates, (Remember that anytime the difference in interest rates does not exactly equal the forward premium, it must be possible to make CIA profit one way or another) What is the CIA profit potential? [X.XXXX) - do not include the sign gepronit using Libyan dinars and Saudi Riyals. He has $1,000,000 to work with so he gathers the following quotes Citibank quotes U.S. dollar per Libyan dinar: $1.9324/LYD National Bank of Kuwait quotes Saudi riyal per ubyan dinar: SAR 1.9405/LYD Barclay quotes U.S. dollar per Saudi riyak $0.2667/SAR Covered Interest 6. 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, Assumptions Value Arbitrage funds available $5,000,000 Spot rate (V/S) 118.00 180 day forward rate (W/S) 117.80 180 day U.S. dollar interest rate 14.00 180-day Japanese yen interest rate 3.400N 7: Takeshi Kamada, Credit Suisse (Tokyo), observes that the w/S spot rate has been holding steady, and both dollar and yen interest rates have remained relatively Fored over the past week QUESTION 1 Takeshi Kamada, Credit Suisse (Tokyo), observes that the W/5 spot rate has been holding steady, and both dollar and yen interest rates have remained relatively fixed over the past week. Takeshi wonders if 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 1118.00/5 for the coming 180 days. Using the same data as in the previous problem, analyze the USA potential. What is the CIA profit potential? DX.XXXX) - do not include the % sien
