Suppose an investor makes an uncovered interest arbitrage investment in the USD by borrowing JPY 14,200,000 in Japan at 0.75%, then converting to dollars at a rate of 142JPY = 1 USD and investing in US at 3.94% for one year. In one year, when the investment matures, the spot rate is now 122 JPY = 1 USD.

How much has the investor gained or lost in yen? Represent losses with as negative numbers. Answer to two decimal places.

Answer rating: 100% (QA)

To calculate the gain or loss in yen for the investor we need to consider the interest earned on the ... View the full answer