Consider a 5-year maturity euro area government bond that is priced at 92.5880 with a 2.60% yield. This bond has a 1.0% coupon rate, a par value of 100 and the coupon payment frequency is annual.

a) Determine if this 5-year bond is expensive or cheap relative to the spot rate curve presented in table 2.

b) How would you take advantage of this investment opportunity? Explain your answer clearly. Table