In a daily meeting, the Chief Financial Officer (CFO) gave Ari the following table of market rates Spot exchange rate: Yen 106/$ U.S. dollar interest rate per annum 10% Japanese Yen interest rate per...

In a daily meeting, the Chief Financial Officer (CFO) gave Ari the following table of market rates

and told Ari that the company’s financial analyst expected the Japanese Yen to depreciate against the U.S. dollar by 3.46% in 90 days. Assume there are 360 days in a year, and all interest rates are simple interest rates. If the financial analyst’s prediction about the US dollar and Japanese Yen turned out to be true:

• What would the spot exchange rate (Yen/$) be in 90 days?


• Would Ari make a profit by borrowing 1 million US dollar and investing in the money markets?

        If yes, how much profit would Ari realize in 90 days?