1) The ER between the Swiss franc and the US dollar is one to one in the spot market. The interest rates in Switzerland and the US are .01 and .03 respectively. What kind of arbitrage will induce a profit for you, if the forward rate is .8 Swiss francs equal $1? Assume you start with $1 million.

2) Expound on interest parity theory in the aforementioned context. Is the above situation sustainable? Specifically, how does this problem exhibit IPT? (You have to connect your results with IPT.)

Please help me understand how to solve this problem step by step and explain how the answer was formulated