A risk-free zero coupon bond pays $1,000 at the end of six years. (a) The risk-free rate is currently 10% effective annual. What should the current price of the bond be? (b) Suppose the bond currently costs $500. Describe an arbitrage to take advantage of any discrepancy you see. What will you buy? What will you sell? What are your cashflows today and in the future? For the remaining sub-questions, assume that there are no arbitrage opportunities. (c) Joan buys the bond today after arbitrage by market participants has restored its price to what it should be. She intends to hold it till maturity, and to receive the payment of $1,000. What will her HPR be? What will her annualized HPR (AHPR) be?