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given in the following table. As the portfolio manager, you are asked to hunt for the arbitrage profit. Price Cash Flow Bond TODAY Year /

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given in the following table. As the portfolio manager, you are asked to hunt for the arbitrage profit. Price Cash Flow Bond TODAY Year / Yeur 2 Yeur 3 Yeur 4 A 10 1 2 3 4 B 12 2 3 4 5 15 3 4 S 6 D 17 4 6 7 (a) 2 points) Do these prices admit an arbitrage opportunity? (b)[8 points) If so show how you can construct an arbitrage strategy to take advantage of the mis- pricing for arbitrage profit

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