Consider an economy with three periods, t = 0, 1, 2. There are two bonds in this economy with the following payoffs Bond A has t = 0 price of $99, with a coupon rate of 10% and par value $100. Interest payments are made annually. Bond B has t = 0 price of $105, with a coupon rate of 30% and par value $100. Interest payments are made annually. Both bonds mature at t = 2. (1) Is there an arbitrage opportunity by trading those bonds? (3p) (2) Find an arbitrage portfolio if arbitrage exists. (3p) (3) Now suppose t = 0 price of Bond B is 120 instead of 105. Is there arbitrage? (3p) (4) Following part 3, can you create a portfolio with payoff of (120 190) and what is the t=0 price of this portfolio? (3p)