Assume there are fourdefault-free bonds with the following prices and future cashflows:

Cash Flows

Bond

Price Today($)

Year 1($)

Year 2($)

Year 3($)

A

931.06

931.06

1,000

0

0

B

878.34

878.34

0

1,000

0

C

1 comma 114.82

1,114.82

100

100

1,100

D

833.81

833.81

0

0

1,000

Do these bonds present an arbitrageopportunity? Ifso, how would you take advantage of thisopportunity? Ifnot, whynot?

Do these bonds present an arbitrageopportunity? (Select the best choicebelow.)

A.

No

B.

Yes

C.

Not enough information.

How would you take advantage of the arbitrageopportunity?(Select from thedrop-down menus.)

0

1

10

11

Abond(s),

sell

buy

0

1

10

11

Bbond(s),

buy

sell

0

1

10

11

Cbond(s) and

sell

buy

0

1

10

11

Dbond(s).

This would result in a net profit of $

nothing

. (Round to the nearestcent.)