Assume that you have the following information: i. ii. iii. iv. A 2-year zero coupon bond with the face value of $1,000 trades at $895.52 A 4-year zero coupon bond with the face value of $1,000 trades at $777.32 A 6-year zero coupon bond with the face value of $1,000 trades at $657.08 A 3-year coupon bond with the face value of $1,000 and the annual coupon rate of 8% trades at $1,050.22, where coupons are paid annually There is a security with a 1-year forward rate in the second year (f2) of 6.25% (i.e. you can either borrow or lend over 1 year at this rate during the second year) (e.g. you can lend $1 at t = 1 to receive $1.0625 at t =2 or you can borrow $1 at t = 1 to pay back $1.0625 at t = 2). V. a. What are the yield-to-maturities for the three zero coupon bonds? b. What should the price be for a 2-year coupon bond with a face value of $1,000 and an annual coupon rate of 5%, where coupons are paid annually? c. What should the price be for a 4-year annual coupon bond with a face value of $1,000 and an annual coupon rate of 6%, where coupons are paid annually? d. Assume that the 3-year zero coupon bond with the face value of $1,000 is traded at $850. If you are restricted to using only the securities (i)-(v) listed at the beginning of the question, is there an arbitrage opportunity? If yes, show the exact transactions that you need to make in order to obtain an arbitrage profit. Hint: You should create a table of the net cash flows with any arbitrage profit to be captured today