Question.

1. What are the possible risk factors that financial executives in MNCs may face?

2. 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 0.6395. Show how you can make a triangular arbitrage profit by trading at these prices. Ignore the bid-ask spreads for this problem. Assume that you have $5,000,000 with which to conduct the arbitrage.