N9 2. You are given the following information about four bonds traded in the market: Bond Coupon rate Price Time to maturity (years) A 10% 99 1 B 10% 96 2 C 8% 97 3 D 4 Find the spot rates in the given market. State all necessary assumptions. Estimate the expected spot rate for a two year investment that will be made in the end of the second year. Suppose bond N is currently traded at the market at a price of 95. Bond N has a coupon rate of 8% and 3 years to maturity. Are there any arbitrage opportunities? If yes, provide a detailed strategy to obtain an arbitrage profit. Find the yield to maturity of bond N directly and using approximation. What is the intuition behind the approximation formula? Are there any limitations of the approximation formula? Describe and explain different option-like characteristics of bonds. How do they affect bond prices