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Intro Suppose that you are an investment banker, and you just noticed that the price of a Treasury bond is lower than the amount at
Intro Suppose that you are an investment banker, and you just noticed that the price of a Treasury bond is lower than the amount at which the sum of its parts could be sold. Part 1 - Attempt 1/5 for 9 pts. Which of the following statements are true? Check all that apply: There are no arbitrage opportunities in this situation. You can profit by buying the stripped cash flows and reconstituting the bond. This situation creates opportunities for arbitrage. You can profit by buying the bond and stripping the bond into several zero- coupon securities and selling them. Submit Part 2 - Attempt 1/5 for 9 pts. Now suppose a situation in which you notice that the price a Treasury bond is higher than the amount at which the sum of its parts could be sold. Which of the following statements are true? Check all that apply: You can profit by buying the bond and stripping the bond into several zero- coupon securities and selling them. You can profit by buying the stripped cash flows and reconstituting (reassembling) the bond. There are no arbitrage opportunities in this situation. In this situation, the law of one price is violated. Submit
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