In a financial market, the following three securities are traded:

• Regular Annuity: Maturity = 5 years, Annual payments in arrears = $28.000, Current price = $125.450.
• Regular coupon bond: Maturity = 5 years, Face value = $1,000.000, Coupon rate = 7.000%, Current price = $965.405.
• Zero-coupon bond: Maturity = 5 years, Face value = $500.000, Current price = $450.340.

Assuming that an arbitrager can buy/(short) sell the fraction quantities of the above securities. What will be the arbitrage strategy at t=0 which results in positive cash flow of $2.00 at t=0 and zero outflows at t=1, t=2, t=3, t=4, and t=5?

S1) ["Sell", "Buy"] [ ] quantity of Regular Annuity; and

S2) ["Sell", "Buy"] [ ] quantity of Regular Coupon Bond; and

S3) ["Sell", "Buy"] [ ] quantity of Zero-Coupon Bond.