A government issues risk-free zero-coupon bonds that pay $100 at maturity. The price of 1-year bond is $88, and the price of 2-year bond is $90. Is there an arbitrage opportunity? How can you make a profit from this arbitrage?

Yes, long 1-year bond and short sell 2-year bond.

No, there is no arbitrage opportunity.

Yes, long 2-year bond and short sell 1-year bond.

Not enough information to answer.