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,

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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				Yen Equivalent
Arbitrage funds available				$5,000,000				593,000,000
Spot rate (/$)				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%

1) The difference between interest rate ( i$ - i/) is % (in 2 decimals). 2) The forward premium on the yen is % (in 2 decimals). 3) It seems there is a covered interest arbitrage opportunity, the arbitrage profit is .