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5) Bond Maturity FV Coupon Yield Price Zero1 1 100 10 1% $99.0099 Zero2 12 100 10 2% $96.1169 Coupon2 2 100 4% n.a.

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5) Bond Maturity FV Coupon Yield Price Zero1 1 100 10 1% $99.0099 Zero2 12 100 10 2% $96.1169 Coupon2 2 100 4% n.a. $101 Given the bond prices in the table, you should A) Buy the two zeros and sell the coupon bond B) Buy the coupon bond and sell the two zeros C) Nothing. The prices are consistent. There is no arbitrage opportunity. p) Buy the underpriced asset and sell the equivalent fairly priced asset.

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