(Solved):   Please show how to calculate in excel. The interest rate is \( 10 \% \) on the dollar and ...

 

Please show how to calculate in excel.

The interest rate is \( 10 \% \) on the dollar and \( 2 \% \) on the yen. Also, the current spot rate is \( \$ 1=\neq 120 \) and the one-year forward rate is \( \$ 1= \) \( ¥ 115 \). Is there an opportunity for covered interest arbitrage? If yes, what is the arbitrage profit in terms of a percentage? Select one: a. Yes. \( 4.2 \% \) b. Yes. \( 1.54 \% \) c. No. d. Yes. 3.42\%. The correct answer is: Yes. \( 3.42 \% \).