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James Clark is a foreign exchange trader with Citibank. He notices the following quotes. Spot exchange rate SFr1.2051/US$ 1 year forward exchange rate SFr1.1922/US$ 1

James Clark is a foreign exchange trader with Citibank. He notices the following quotes.
Spot exchange rate SFr1.2051/US$
1 year forward exchange rate SFr1.1922/US$
1 year US$ interest rate 1.25% per year
1 year SFr interest rate 3.75% per year
1.1 Is the interest rate parity holding? You may ignore transaction costs. [2]
1.2 Is there an arbitrage opportunity? If yes, show what steps need to be taken to make arbitrage profit. Assuming that James Clark is authorized to work with US$1 000 000, compute the arbitrage profit in dollars.

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