1 a) The US government has issued a US Treasury bond which has exactly 3 years to maturity (hereinafter "the bond" in Q1a). The annual coupon rate on the bond is 3.5% and coupons are paid annually. The face value of the bond is $1,000. The current market price for the bond is $950. Below are the prices of zero-coupon US Treasury bonds (face value: $1,000): Maturity 1 2 3 Price $973 $923 $885 i. With the above information, please explain if $950 is a fair price for the bond. If it is not a fair price, develop an arbitrage strategy and explain your rationale. (7%) ii. Based on the bond's fair value and its face value, can you determine whether the yield to maturity on the bond is above or equal or below its coupon rate? (2%) b) As a foreign investor who invests in the UK financial market, please critically discuss the potential risks and opportunities of investing in foreign financial market. Please support your arguments with recent real-life examples. (8%) c) "CAPM is a fine theory but useless in the