James Clark is a currency trader with Wachovia. He notices the following quotes:Required:a$.$ Is the interest rate parity holding? You may ignore transaction costs.b$.$ 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.

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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.

$\backslash$table$[[$What steps should be taken to make arbitrage profit?,$\backslash$table$[[$Borrow at the dollar interest rate and invest at the Swiss franc rate. Hedge$],[$exchange rate risk by selling Swiss francs forward.$]]],[$Arbitrage profit,$]]$