Copenhagen Covered (B). Heidi Hi Jensen, a foreign exchange trader at J.P. Morgan Chase, can invest $4.9 million, or the foreign currency equivalent of the bank's short term funds, in a covered interest arbitrage with Denmark. She is now evaluating the arbitrage profit potential in the same market after interest rates change: LOADING... . (Note that anytime the difference in interest rates does not exactly equal the forward premium, it must be possible to make CIA profit one way or another.) Question content area bottom Part 1 The CIA profit potential is enter your response here%, which tells Heidi that she should borrow Danish krone U.S. dollars and invest in the higher lower interest rate currency, the dollar the krone , gaining on the re-exchange of dollars for krone at the end of the period. (Round to three decimal places and select from the drop-down menus.) Part 2 The CIA profit amount is krenter your response here. (Round to two decimal places.) Financial calculator Time Remaining: 02:05:26 Next pop-up content starts Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Arbitrage funds available $4,900,000 (kr=$1.00) 6.1717 (kr=$1.00) 6.1984 U.S. dollar 3-month interest rate 4.000% Danish krone 3-month interest rate 5.100% Arbitrage funds available $4,900,000 Spot exchange rate 6.1717 (kr=$1.00) 3-month forward rate 6.1984 (kr=$1.00) U.S. dollar 3-month interest rate 4.000% Danish krone 3-month interest rate 5.100%.

1. Copenhagen Covered (B). Heidi Hi Jensen, a foreign exchange trader at J.P. Morgan Chase, can
invest
$4.9
million, or the foreign currency equivalent of the bank's short term funds, in a covered interest
arbitrage with Denmark. She is now evaluating the arbitrage profit potential in the same market
after interest rates change:
LOADING...
. (Note that anytime the difference in interest rates does not exactly equal the forward premium, it
must be possible to make CIA profit one way or another.)
Question content area bottom
Part 1
The CIA profit potential is
enter your response here%,
which tells Heidi that she should borrow
Danish krone
U.S. dollars
and invest in the
higher
lower
interest rate currency,
the dollar
the krone
, gaining on the re-exchange of dollars for krone at the end of the period. (Round to three decimal
places and select from the drop-down menus.)
Part 2
The CIA profit amount is
krenter your response here.
(Round to two decimal places.)
Financial calculator
Time Remaining: 02:05:26
Next
pop-up content starts
Data table
(Click on the following icon
in order to copy its contents into a spreadsheet.)
Arbitrage funds available
$4,900,000
(kr=$1.00)
6.1717
(kr=$1.00)
6.1984
U.S. dollar 3-month interest rate

2. 4.000%
Danish krone 3-month interest rate
5.100%
Arbitrage funds available $4,900,000
Spot exchange rate
(kr=$1.00)
6.1717
3-month forward rate
(kr=$1.00)
6.1984
U.S. dollar 3-month interest rate 4.000%
Danish krone 3-month interest rate 5.100%