Assume you are a trader with Deutsche Bank. From the quote screen on your computer terminal, you notice that Dresdner Bank is quoting €0.7627/$1.00 and Credit Suisse is offering SF1.1806/$1.00. You learn that UBS is making a direct market between the Swiss franc and the euro, with a current €/SF quote of .6395. Show how you can make a triangular arbitrage profit by trading at these prices. (Ignore bid-ask spreads for this problem.) Assume you have $5,000,000 with which to conduct the arbitrage. ****** Note: Some of these questions require you to adjust the rate for varying time horizons. Remember the basis of net present value as variants of PV calculation apply. PV * (1+r)^n = FV at time n. When time is less than 1 year, and an annual rate is quoted, divide r/12 to derive monthly rate and multiply by number of months.