It is $2024$ now. The current term structure of spot rates is given below:

Assume annual compounding.

$($a$)$ What are the one$-$year forward rates for $2025$ and and ${\displaystyle \underset{2026}{\overset{\phantom{}}{}}},1,$ respec$-$

tively$)?$

$($b$)$ What is the two$-$year forward rate for $2025(f_{2n25,2})?$

$($c$)$ Suppose that the two$-$year forward rate for $2025$ prevailing in the market is $4\%.$ Is

there an arbitrage opportunity? If so$,$ explain how you can exploit it $($i$.$e$.,$ specify all

the legs of your investment strategy and the corresponding cash flows$).$ What would

be the arbitrage profit today?