Who can profit from covered interest arbitrage, and how? Ignore taxes and transaction costs.

The annual risk-free interest rate is 5% in the U.S. and 7% in Japan. The spot rate is $0.0092 per yen and the one-year forward rate is $0.0089 per yen. What is the no-arbitrage forward rate (in $ per yen)? Attempt 1/10 for 10 pts. Correct Forward premium from interest rate parity: p=1+rf1+rh1=1+0.071+0.051=0.01869 No-arbitrage forward rate: F=S(1+p)=0.0092(1+(0.01869))=0.00903 Who can profit from covered interest arbitrage, and how? Ignore taxes and transaction costs. Check all that apply: No one can profit from covered interest arbitrage. U.S. investors can profit by buying yen in the forward market. Japanese investors can profit by buying dollars in the forward market. Japanese investors can profit by selling dollars in the forward market. U.S. investors can profit by selling yen in the forward market