Question I. (Foreign Exchange Arbitrage) A foreign currency trader in Tokyo is exploring into opportunity to earn a riskless profit. He intends to invest $5,000,000 or Yen equivalent. Use the following information. Assumptions Spot rate (W/S) 180-day U.S. dollar interest rate 180-day Japanese yen interest rate Value 118.60 118.00 4.400% pa. 3,000%op.a. 180-day forward rate S) 1. Describe in detail how the trader can earn riskless profits and calculate amount of potential 2. Assuming that all other things including current spot rate, dollar interest rate and yen interest rate riskless profits that he can earn. remain unchanged, calculate 180-day forward rate (Y/S) which will not allow the trader to earn a riskless profit any longer. Assuming that all other things including current forward rate, dollar interest rate and yen interest rate remain unchanged, calculate current spot rate (/S) which will not allow the trader to earn a riskless profit any longer. 3