Assume that the spread on Bond C in the CDS market is 4%. Assume that in the spot market, the spread between the risky bond and the risk-free bond is 3%. What should a trader do?

Buy the CDS and simultaneously buy the risk-free bond and short sell the risky bond.

Sell the CDS and simultaneously buy the risk-free bond and short sell the risky bond.

Buy the CDS and simultaneously buy the risky bond and short sell the risk-free bond.

Sell the CDS and simultaneously buy the risky bond and short sell the risk-free bond.