B . 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/$100. 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. What happens if you initially sell dollars for Swiss francs? What ESF price will eliminate triangular arbitrage? Suppose that the current spot exchange rate is 1.50/ and the one-year forward exchange rate is 1.60/. The one-year interest rate is 5.4 percent in euros and 5.2 percent in pounds. You can borrow at most 1,000,000 or the equivalent pound amount, that is, 666,667, at the current spot exchange rate. a. Show how you can realize a guaranteed profit from covered interest arbitrage. Assume that you are a euro-based investor. Also determine the size of the arbi- trage profit. b. Discuss how the interest rate parity may be restored as a result of the above transactions. c. Suppose you are a pound-based investor. Show the covered arbitrage process and determine the pound profit amount