# Finance

1. (Covered Interest Arbitrage) Harry Norman, a foreign exchange trader at UBS’s office in Tokyo has \$2,000,000 or its yen equivalent to invest. He faces the following exchange rates and interest rates. Show how can he profit from the covered interest arbitrage? Spot rate (¥/\$) 112.20 180-day forward rate (¥/\$) 180-day U.S. dollar interest rate 180-day Japanese yen interest rate 109.80 4.00% 2.00%

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