Fixed Income Arbitrage is to find mispricing of coupon bonds through the system of linear equations where # of equations > # of unknowns. Suppose there are only three treasury coupon bonds on the market today: Bond A: 2-year 3% treasury coupon bond, trading today at price $1,007.9 Bond B: 2-year 4% treasury coupon bond, trading today at price $1,027.2 Bond C: 2-year 5% treasury coupon bond, trading today at price $1,050.8 Let Po1 and Poz be the two unknowns, where Poa denotes the price today of a 1-year STRIPS, and Po2 the price today of a 2-year STRIPS. Face value of STRIPS is $1. 1) Since each coupon bond is essentially a portfolio of STRIPS, write the 3-equation 2-unknown system. 2) Usually how many pairs of solutions to the 2 unknowns can you solve for this 3-equation 2-unknown system 3) Focusing on ONLY Bond A and Bond B, will this 2-equation 2-unknown system have solutions? Solve them if yes. 4) Interpret the values you solve for Po.1 and Po.2. Suppose they are indeed the correct market value today, what can you say about arbitrage profit in any of three coupon bonds, in which one(s), how much