Suppose a trader would like to buy a t1-maturity bond at time to. The trader also wants this bond to be liquid. Unfortunately, he discovers that the only bond that is liquid is an on-the- run Treasury with a longer maturity of t2. All other bonds are off-the-run. How can the trader create the liquid short-term bond synthetically assuming that all bonds are of discount type and that, contrary to reality, forward loans are liquid? ( 10 Points) Suppose a trader would like to buy a t1-maturity bond at time to. The trader also wants this bond to be liquid. Unfortunately, he discovers that the only bond that is liquid is an on-the- run Treasury with a longer maturity of t2. All other bonds are off-the-run. How can the trader create the liquid short-term bond synthetically assuming that all bonds are of discount type and that, contrary to reality, forward loans are liquid? ( 10 Points)