Kamada: CIA Japan (A). Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest 4,900,000 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?
Arbitrage funds available $4,900,000
Spot rate (¥/$) 118.42
180-day forward rate (¥/$) 117.87
U.S. dollar annual interest rate 4.807%
Japanese yen annual interest rate 3.393%
The CIA profit potential is −0.481%, which tells Takeshi Kamada that he should borrow the Japanese yen and invest in the higher yielding currency, the U.S.dollar, to lock in a covered interest arbitrage (CIA) profit. (Round to three decimal places and select from the drop-down menus.)
Takeshi Kamada generates a CIA profit of yen¥. by investing in the (higher/lower) interest rate currency, the (dollar/ yen), and simultaneously selling the (dollar/yen) proceeds forward into (dollar/yen) at a forward premium which does not completely negate the interest differential. (Round to two decimal places and select from the drop-down menus.)
Solved
Show answers
More tips
- A Animals and plants Want a Perfect Lawn? Learn How to Plant Grass the Right Way...
- A Animals and plants How to Properly Care for a Pet Decorative Rabbit at Home?...
- C Computers and Internet How to Check the Speed of My Internet?...
- H Health and Medicine 10 Ways to Cleanse Your Colon and Improve Your Health...
- W Work and Career How to Write a Resume That Catches the Employer s Attention?...
- C Computers and Internet Е-head: How it Simplifies Life for Users?...
- F Family and Home How to Choose the Best Diapers for Your Baby?...
- F Family and Home Parquet or laminate, which is better?...
- L Leisure and Entertainment How to Properly Wind Fishing Line onto a Reel?...
- L Leisure and Entertainment How to Make a Paper Boat in Simple Steps...
Answers on questions: Business
- B Business Suppose that the market price for a bottle of vitamins is $2.50 and that at that price the total market quantity demanded is 75,000,000 bottles. how many firms will there...
- B Business Suppose labor s share of output is 60% and capital s share of output is 40%. If labor grows at a rate of 5%, then this will cause output to grow at a rate of percent. If...
- B Business The Japan-based multinational Sony engaged in when it partnered with Shanghai Oriental Pearl Group. Together, the two companies would make and market PlayStation consoles...
- B Business Nordstrom, an upscale department store, has a well-known reputation for going the extra mile to serve its customers. This reputation for excellent customer service will most...
- B Business Which process strategy involves consuming raw materials and working uninterrupted to create a stock of finished goods? a. assemble-to-stock b. make-to-stock c. make-to-order...
- B Business Veronica has a very generous boss who occasionally brings in gift cards for his workers. He does this for no particular reason; it is just a nice way to keep people motivated....
- B Business Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited a. at the end of each accounting period b. when a credit sale is...
- B Business Since commercial finance companies offer loans to higher risk customers than commercial banks, the interest rates they charge are usually than rates charged by banks....
- P Physics One of your authors was once involved in a research study where a newly developed pain drug was being tested. all participants completed a series of tasks intended to represent...
- M Mathematics What is the area of the quadrilateral formed by the points (3,6). (0,0). (-2,9) and (1,15)?...
Ответ:
1.) C. 15
2.) B. 256
these are your answers