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Prices of zero-coupon, default-free securities with face values of $1,000 are summarized in the following table: 3 Maturity (years) Price (per $1,000 face value) 1

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Prices of zero-coupon, default-free securities with face values of $1,000 are summarized in the following table: 3 Maturity (years) Price (per $1,000 face value) 1 $974.87 2 $943.86 $911.70 Suppose you observe that a three-year, default-free security with an annual coupon rate of 10% and a face value of $1,000 has a price today of $1,190.89. Is there an arbitrage opportunity? If so, show specifically how you would take advantage of this opportunity. If not, why not? Is there an arbitrage opportunity? (Select the best choice below.) . No B. Yes C. Not enough information

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