Tony Fernandes, a foreign exchange trader in Canada, has CAD. 4,000,000 for short-term money market investment and wants to make profit based on the following rates. Explain specific steps that Tony Fernandes must take to make a covered interest arbitrage. 6-month Canadian interest rate: 1.60% per annum 6-month Yen interest rate: 2.95% per annum Spot rate: JYP 93.1395/CAD. 6-month Forward Rate JYP 93.8380/CAD. CAD = Canadian Dollar JYP = Japanese Yen

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