( Covered Interest Rate Parity) You are facing the following exchange rates and interest rates....
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( Covered Interest Rate Parity) You are facing the following exchange rates and interest rates.
Spot rate (/$) 100
180-day forward rate (/$) 138
180-day U.S. dollar interest rate 6.9%
180-day Japanese yen interest rate 3.6%
If you can borrow $1,000,000 or the equivalent amount of yen, and you can profit from the covered interest arbitrage, then your profit is $_______________. (Please keep two decimal places.)
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