Consider three securities that will payrisk-free cash flows over the next three years and that have the current market prices shownhere:

Security Name

Price Today($)

Cash Flow in One Year($)

Cash Flow in Two Years($)

Cash Flow in Three Years($)

B1

$92.85

100

0

0

B2

$85.10

0

100

0

B3

$388.22

0

0

500

Calculate theno-arbitrage price, or the price that eliminates any arbitrageopportunities, of a newsecurity, B4, that paysrisk-free cash flows of$500 in one year and$1,000 in three years.

The currentno-arbitrage price of Security B4is: