Question: Question 2 James Chang, a foreign exchange trader at J.P. Morgan Chase USA, can invest $5 million or the foreign currency equivalent of the bank's

Question 2 James Chang, a foreign exchange trader at J.P. Morgan

Question 2 James Chang, a foreign exchange trader at J.P. Morgan Chase USA, can invest $5 million or the foreign currency equivalent of the bank's short term-funds in a covered interest arbitrage with Denmark. He has the following quotes: Spot exchange rate: DKr 7.5000/$ Three-month forward rate: DKr 7.5372/$ Three-month dollar interest: 3% per year (0.75% for 90days) Three-month krone interest: 5% per year (1.25% for 90 days) Can James Chang make a covered interest arbitrage profit

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