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5. (20 points) Suppose that a zero-coupon bond that matures in 1 year costs $97 and that a zero-coupon bond that matures in 2 years

5. (20 points) Suppose that a zero-coupon bond that matures in 1 year costs $97 and that a zero-coupon bond that matures in 2 years costs $94 a) What must be the price of a 2-year coupon bond with a 5% coupon rate? All face values are S100. b) How could you make an arbitrage profit if the coupon bond were trading at S100

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