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Example 3: Arbitrage Pricing with Dynamic Strategy Suppose -a zero-coupon bond that matures in t = 1 costs $98 -In t = 1, a zero-coupon

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Example 3: Arbitrage Pricing with Dynamic Strategy Suppose -a zero-coupon bond that matures in t = 1 costs $98 -In t = 1, a zero-coupon bond that matures in t = 2 also costs $98 What must be the price of a zero-coupon bond that matures 2 years from now? How could you make an arbitrage if the 2-year zeno were trading at $95? SCHOOL of BUSINE88 DMINISTRATION LU

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