2. Given the following: The yield on a five-year, risk-free Treasury-note = 5% The yield on a five-year, BB-quality bond = 8%, with the 3% spread reflecting only credit risk The credit spread on a five-year CDS on the 5-year, BB-quality bond of 2% a. Explain how a bond investor looking for a five-year, risk-free investment could gain a 1% yield over the risk-free investment by using a CD. b. Explain what an arbitrageur would do.