Suppose that the prevailing Treasury spot rate curve is the one shown in Exhibit 5. a. What is the value of a 7A% 8-year Treasury issue? b. Suppose that the 7.4% 8-year Treasury issue is priced in the market based on the on-the-run 8-year Treasury yield. Assume further that yield is 5.65%, so that each cash flow is discounted at 5.65% divided by 2. What is the price of the 7.4% 8-year Treasury issue based on a 5.65% discount rate? c. Given the arbitage-free value found in pat a and the price in part b, what action d. What process assures that the market price will not differ materially from the Suppose that the prevailing Treasury spot rate curve is the one shown in Exhibit 5. would a dealer take and what would the arbitrage profit be if the market priced the 7.496 8-year Treasutry issue at the price found in part b? arbitrage-free valuc? a. What is the value ofa 4% 8-year Treasury issue? b. Suppose that the 4% 8-year Treasury issue is priced in the market based on the on-the-run 8-year Treasury yield. Assume further that yield is 5.65%, so that each cash flow is discounted at 5.65% divided by 2. What is the price of the 4% 8-year Treasury issue based on a 5.65% discount rate? c Given the arbitrage-free value found in part a and the price in part b, what action would a dealer take and what would the arbitrage profit be if the market priced the 49% 8-year Treasury issue at the price found in part bi d. What process assures chat the marker price will not differ materially from the arbitrage-free value