The one-year forward rate is usdjpy 108 assume an


Interest rates on one- year instruments denominated in JPY and USD are 1 percent and 3 percent, respectively. The JPY is currently trading at a rate of USDJPY 110.50.

The one-year forward rate is USDJPY 108. Assume an arbitrageur tries to use CIA by borrowing USD and investing proceeds in JPY, is this strategy profitable?

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Financial Management: The one-year forward rate is usdjpy 108 assume an
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