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A three-year bond has an annual coupon of $5 per year and par value of $100. Another three-year bond has an annual coupon of $4

A three-year bond has an annual coupon of $5 per year and par value of $100.

Another three-year bond has an annual coupon of $4 per year and par value of $100.

The price of both of these bonds is $99.50. Suppose that the price of the bond with a

coupon of $4 is $99.50 and that the price of the bond with a coupon of $5 is $102.50.

Show any arbitrage opportunities.

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