Its lunchtime. You are thinking about this restaurant, Obligation du Tresor, whereyou have always wanted to go but never did because you thought it was too pricey.Luckily, you bump into your friend Jerry, the bond trader. Today Jerry is buying andselling the following bonds:Bond Coupon rate (%) Maturity YTM(%)A 0 1 year 5.00B 5 2 years 5.85C 7 2 years 6.25Coupon payments are annual, and bid-ask spreads are zero.(a) What are the prices of the above bonds?(b) Is it possible to construct an arbitrage (and get a free lunch at Obligation duTresor), given the bond prices? If so, what is the trading strategy that producesthe arbitrage?Hint: Given the prices of two bonds, determine whether the third bond is overorunder-priced.