Interest rates on one- year instruments denominated in jpy, Ask an Expert

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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, Finance

Category:- Financial Management
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