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Score: 0.75 of 2 pts 5 of 918 complete HW Score: 48.33%, 7.25 of 15 pts Question Help Problem 6-7 (algorithmic) Kamada: CIA Japan (A),

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Score: 0.75 of 2 pts 5 of 918 complete HW Score: 48.33%, 7.25 of 15 pts Question Help Problem 6-7 (algorithmic) Kamada: CIA Japan (A), Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered brest arbitrage poss e s. He wants to invest $5,000,000 or its yen equivalentina covered interest arbitrage between US dollars and Japanese yen faced the following exchange rate and interest rate quotes Is CIA profit possible? If so, how? $ Arbitrage funds available Spot rate (1/5) 180-day forward (5) US dollar annual interest rate Japanese yen annual interest rate 5.000.000 118.43 117.82 4.805 3107 The CIA profit potentials - 373 which als Takeshi Kamada that he should bomow the Japanese yen and invest in the higher yielding currency, the US doll to lock in a covered interest arbitrage CIA) proft Round to the decimal places and from the drop-down menus) Takeshi Kamada generates a CIA profit or b y investing in the interest rate currency, the and simultaneously selling the proceeds forward into a forward premium which does not completely negate the interest differential (Round to two decimal places and select from the drop-down menus) in the name and then click Check

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