Question: Consider the yen carry trade example done in lecture. Specifically, use the same current exchange rate and given USD and JPY interest rates, and assume

Consider the yen carry trade example done in lecture. Specifically, use the same current exchange rate and given USD and JPY interest rates, and assume a short position of 100,000,000 to fund a long position in dollars. What are the profits (in dollars) of this currency trading strategy if one year from now the exchange rate is 80.00/$?

Current market conditions:

1-yr yen interest rate: 1%

1-yr dollar interest rate: 6%

Current exchange rate: 84.21/$

Exchange rate 1 year from now: 80.00/$

PLEASE PUT ANSWER IN USD

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