Question 6 (1 point) Consider two firms (levered and unlevered) with identical future earnings in a perfect world. The unlevered firm value is $1400 today. The levered firm sold debt for $900 today and promise to pay back $1000 next year (when debt is due and earnings realizes). Today, the market prices equity of levered firm is $450. Which strategy yields arbitrage profits? Strategy 1. Buy 10% of equity and bonds of levered firm, and sell short 10% of the equity of the unlevered firm. Strategy 2.Sell short 10% of equity and bonds of levered firm, and buy 10% of the equity of the unlevered firm. Strategy 1 Strategy 2 Both strategies lead to losses Both strategies lead to profits