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Answer to Question #64081 in Finance for Ahmad

Question #64081
. Kazuma Matsumoto, a foreign exchange trader in Japan, has JPY 50,000,000 for short-term money market investment and wants to make profit based on the following rates. Explain specific steps that Kazuma must take to make a covered interest arbitrage. State your answer in JPY.

3-month Germany interest rate: 2.85% per annum

3-month Japan interest rate: 1.5% per annum

Spot rate: JPY 125.9100/EUR

3-month Forward Rate JPY 126.8500/EUR
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