Ionutzakis

First off, this is reading 48 in the new curriculum and the related page is 40.
1) 1.76 is spot rate is terms of USD while 1.062 represents the discount factor using the foreign currency’s interest rate. You can tell that 6.2% is the foreign rate because the spot rate is given in terms of USD. I know the USD is the domestic currency because the question states this!
2) This means you buy the foreign currency and invest it at the foreign interest rate. Think of it as buying a pound in Britain and depositing the pound in a bank in Britain. Since the interest rate is 6.2%, a year later, the pound will be worth 1.062. However, in the above example, since you’re an arbitrager, you’re only buying 0.9416 units of the pound.