Make risk free profit in dollar

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Reference no: EM131920846

1. The Japanese Yen (JPY) dollar in the spot exchange rate is JPY104.2406/$ and the six-month forward rate is JPY 110.35/$. One-year government bills yield 0.31% in the United States and -0.35% in Japan.

2. Assuming you can borrow $ 1,000,000 or its Yen equivalent; show how you can make a "risk free" Profit in dollar. Assume transaction costs are $ 1,000 or its Yen equivalent.

Reference no: EM131920846

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