Question 1 please

1. The absence of arbitrage is an important restriction on the relative prices of different Treasury notes/bonds. This question asks you to think about it in a simplified setting. Consider the following three Treasury securities that all mature in three years. CF Year 2 Bond . Price (at 0) $94 $100 $112 CF Year 1 $4 $6 $12 $4 CF Year 3 $104 $106 $112 B $6 $12 The cash payments of all bonds are made at the same time - on the last day of the year. There are no taxes or transactions costs. Show the trades that construct an arbitrage opportunity. What is your arbitrage profit