Assume you are a trader with Deutsche Bank. From the quote screen on your computer terminal, you notice that Commerzbank is

quoting $\frac{0\mathrm{.}7777}{\text{\$}}1\mathrm{.}00,$ and Credit Suisse is offering SFr$1\mathrm{.}1956/$$$1\mathrm{.}00.$ You learn that UBS is making a direct market between the Swiss

franc and the euro, with a current $\frac{C}{S}Fr$ quote of $0\mathrm{.}6245.$ Show how you can make a triangular arbitrage profit by trading at these

prices. Ignore bid$-$ask spreads for this problem. Assume you have $$5,003,000$ with which to conduct the arbitrage. Enter only the

numeric portion of your answer without the currency symbols.

Required:

a$.$ What is the implied $\frac{}{?}$ SFr cross$-$rate derived from the dollar exchange rates quoted by Commerzbank and Credit Suisse?

b$-1.$ Describe the sequence of transactions you should undertake to earn a triangular arbitrage profit.

b$-2.$ What is your triangular arbitrage profit?

c$.$ What happens if you initially sell dollars for Swiss francs?

d$.$ What $\frac{}{S}Fr$ price will eliminate triangular arbitrage?

Complete this question by entering your answers in the tabs below.

What is the implied $\frac{}{?}$ SFr cross$-$rate derived from the dollar exchange rates quoted by Commerzbank and Credit Suisse?

Note: Do not round intermediate calculations. Round your answer to $4$ decimal places.

Implied cross$-$rate