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3. Citibank quotes NZ$1 = US$ 0.6624. Deutsche Bank quotes 1 = US$1.1758.BNZ Bank quotes 1 = NZ$1.7762. a. If these quotes are simultaneously observed

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3. Citibank quotes NZ$1 = US$ 0.6624. Deutsche Bank quotes 1 = US$1.1758.BNZ Bank quotes 1 = NZ$1.7762. a. If these quotes are simultaneously observed spot rates, can you make an arbitrage profit? If so, calculate what profit would you make if you started with NZ$ 1 million. Assume that there are no transaction costs. (10 marks) b. What would be your arbitrage profit if you were to incur total transaction costs of 0.1% of the amount used for conversions

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