Answer:
The riskless profit is $0.2 per US dollar invested.
Explanation:
New Zealand dollar to US dollar exchange rate is 1.35
1 US dollar = 1.35 New Zealand dollars
1 New Zealand dollar = 0.54 pounds
Calculate the number of pounds that one can buy with 1.35 New Zealand dollars -
Number of pounds = 0.54 * 1.35
= 0.729 pounds
The number of pounds that one can buy with 1.35 New Zealand dollars is 0.729 pounds.
1 US dollar = 0.61 pounds
1 Pound = (1/0.61) US dollars
1 Pound = $1.64
Calculate the number of US dollars that one can buy with 0.729 pounds -
Number of US dollars = 0.729 * 1.64 = $1.2
The number of US dollars that one can buy with 0.729 pounds is $1.2
It can be seen that investing 1 US dollar and then cross conversion leads to a return of $1.2.
Riskless profit = $1.2 - $1 = $0.2
Therefore, The riskless profit is $0.2 per US dollar invested.
