Current bond price is $1000 and coupon payments will be made $60 every 6 months. Risk-free zero rates are 9% and 9.5% for 6 months and 1 year, respectively, with continuous compounding.

1) Given this information, what should be forward price for no arbitrage opportunity?

2) If the one-year forward price is $980, does arbitrage opportunity exist? If so, what is the arbitrage strategy to exploit the opportunity and how much is the arbitrage profit?

show how you derived the forward price with no arbitrage opportunity and with respect to arbitrage strategy