Consider each period as six months. (Assume semiannual compounding).

Given that :

1. No-arbitrage price of a 3.8% coupon 3-year Treasury is 1044.722631,

2. The price of 3.8% coupon 3-year Treasury issue in the market to yield 2% is 1052.159288

Period	Spot Rate (%)
1	1.0000
2	1.2500
3	1.5000
4	1.7500
5	2.0000
6	2.2500

What is an arbitrage opportunity here? what action would a dealer take and what would the arbitrage profit be if the market priced the 3.8% 3-year Treasury issue at the price you found? show the arbitrage strategy and the actual riskless earnings from this strategy.