2. A corporate bond offers 5% coupon rate and has 3 years of remaining maturity. Par value is $1,000. Interest is paid annually. The following rates are from the Treasury spot rate curve.

	Time-to-Maturity (years)	Spot Rates
	1	4.86%
	2	4.95%
	3	5.65%

(1) This corporate bond is currently trading at a Z-spread of 200 basis points. Determine the equilibrium yield to maturity based on the theoretical price of this corporate bond.

(2) If the current yield to maturity of this corporate bond on the Bloomberg screen is 7.80%, is there any arbitrage profit? If there is a profit, what is the amount of the profit?