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Assume zero-coupon yields on default-free securities are as summarized in the following table: Maturity (years) 1 2 3 Zero-coupon YTM 3.6% 3.8% 4% g) Is
Assume zero-coupon yields on default-free securities are as summarized in the following table: Maturity (years) 1 2 3 Zero-coupon YTM 3.6% 3.8% 4% g) Is there an arbitrage opportunity? If so, describe how would you take advantage of this opportunity? If not, why not? (7 marks)
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