James Clark is a currency trader with Wachovia. He notices the following quotes:

Spot exchange rate SFr$1\mathrm{.}2068$ per $

Six$-$month forward exchange rate SFr$1\mathrm{.}1939$ per $

Six$-$month Dollar interest rate $2\mathrm{.}5\%$ per year

Six$-$month Swiss franc interest rate $2\mathrm{.}0\%$ per year Required:

Is the interest rate parity holding? You may ignore transaction costs.

What steps should be taken to make arbitrage profit? Assuming that James Clark is authorized to work with $$1,000,000.$ Compute the arbitrage profit. Is the interest rate parity holding? You may ignore transaction costs.

Is the interest rate parity holding? No

What steps should be taken to make arbitrage profit? Assuming that James Clark is authorized to work with $$1,000,000.$ Compute the arbitrage profit. Note: Round off the final answer to nearest whole dollar.

What steps should be taken to make arbitrage profit? Borrow at the dollar interest rate and invest at the Swiss franc rate. Hedge exchange rate risk by selling Swiss francs forward.

What is the Arbitrage profit $ $[$need answer$]$