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1. Arbitrage Opportunities You can buy or sell the following default-free bonds. All bonds mature at Year 3. Their prices today and cash ows at

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1. Arbitrage Opportunities You can buy or sell the following default-free bonds. All bonds mature at Year 3. Their prices today and cash ows at the end of each year are the following: Bond Price CF Year 1 CF Year 2 CF Year 3 A 94 4 4 104 B 100 6 6 106 C 112 12 12 112 Being a smart person, you quickly make a simple calculation and take a position to lock in an arbitrage prot of $6 today with no future net cash ows. What is your investment strategy

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