c. Demonstrate how you can use bonds A, B and Cto replace a 3-year zero coupon bond with a face value of $1000.

d. IF the 3-year zero coupon bond in c has a market price of $780. Show how you can earn an arbitrage profit. Make sure to provide clesr detail on the arbitrage strategy.

Consider the following information in Table 3, on 3 default-risk free bonds with annual coupon payments and face value of $1000. Table 3 Bond Coupon rate (%) Time to maturity (years) Yield to maturity (%) A A 4 1 5 B 6.5 2 6 8 3 00 Consider the following information in Table 3, on 3 default-risk free bonds with annual coupon payments and face value of $1000. Table 3 Bond Coupon rate (%) Time to maturity (years) Yield to maturity (%) A A 4 1 5 B 6.5 2 6 8 3 00