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2. ($$$) In this problem you are to fantasize that you are a bond trader looking for arbitrage opportunities The first column of the following

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2. ($$$) In this problem you are to fantasize that you are a bond trader looking for arbitrage opportunities The first column of the following table gives the current prices of three government (default free) bonds. Assume that you can take long and short positions in these bonds at the given prices. (If you short a bond you receive the current price but you must pay out all future cash ows.) The remaining columns of the table show the cash ows (7F) produced by the bonds at the end of years 1 and 2. All bonds mature at or before the end of year 2

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