Calculate the arbitrage profit

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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. Assume you have $5,000,000 with which to conduct the arbitrage. Calculate the arbitrage profit.

Reference no: EM131555435

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