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Score Part IV. Calculations (50%) Calculate and answer the following questions. 1. value and coupon payments are annual. (18%) In the following table, all bonds
Score Part IV. Calculations (50%) Calculate and answer the following questions. 1. value and coupon payments are annual. (18%) In the following table, all bonds are default-free. Prices are quoted per $100 of face Coupon rate Bond 1 Market price Yield-to-maturity 10% 2 Bond 2 0% Bond 3 $96.00 0% ? (1) Determine the missing values (marked with "?") in the table. (2) If the observed market price of Bond 3 is $93.63, please design an arbitrage strategy and determine the arbitrage profit. Maturity 2 years 1 year 2 years 5%
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