Kamada: CIA Japan (A). Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $5,050,000 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? The CIA profit potential is%, which tells Takeshi Kamada that he should borrow select from the drop-down menus.) Data table and invest in the higher yielding currency. (Click on the following icon in order to copy its contents into a spreadsheet.) Arbitrage funds available Spot rate (V=$1.00) 180-day forward rate (= $1.00) 180-day U.S. dollar interest rate 180-day Japanese yen interest rate Print Done $5,050,000 118.52 117.81 4.805% 3.398% X to lock in a covered interest arbitrage (CIA) profit. (Round to three decimal places and

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Kamada: CIA Japan (A). Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $5,050,000 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?
The CIA profit potential is %, which tells Takeshi Kamada that he should borrow
select from the drop-down menus.)
Data table
and invest in the higher yielding currency,
(Click on the following icon in order to copy its contents into a spreadsheet.)
Arbitrage funds available
Spot rate (= $1.00)
180-day forward rate (¥ = $1.00)
180-day U.S. dollar interest rate
180-day Japanese yen interest rate
Print
Done
$5,050,000
118.52
117.81
4.805%
3.398%
T
X
to lock in a covered interest arbitrage (CIA) profit. (Round to three decimal places and
Transcribed Image Text:K Kamada: CIA Japan (A). Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $5,050,000 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? The CIA profit potential is %, which tells Takeshi Kamada that he should borrow select from the drop-down menus.) Data table and invest in the higher yielding currency, (Click on the following icon in order to copy its contents into a spreadsheet.) Arbitrage funds available Spot rate (= $1.00) 180-day forward rate (¥ = $1.00) 180-day U.S. dollar interest rate 180-day Japanese yen interest rate Print Done $5,050,000 118.52 117.81 4.805% 3.398% T X to lock in a covered interest arbitrage (CIA) profit. (Round to three decimal places and
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