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.Is CIA profit possible? If so, how?

Assumptions				Value
Arbitrage funds available				$5,000,000
Spot rate (/$)				118.60
180-day forward rate (/$)				117.80
180-day U.S. dollar interest rate				4.800%
180-day Japanese yen interest rate				3.400%