Suppose intrerest rate differentials between us and japan, Financial Management

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Suppose intrerest rate differentials between us and japan

Suppose intrerest rate differentials between US and Japan is 4.5 percent and yen is in 5 percent premium 1-year forward/ The U.S. Interest rate is 5.5 percent, while Japanese Interest rate is 1 percent. Assume you can borrow $10 million or its yen equivalent. Is there an arbitrage profit, and if so how much? Assume Japanese spot rate is 92 yen/$.

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