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Suppose the 1-, 2-, and 3-year spot rates are 2.5%, 2.75%, and 3.25%. What is the price of a 3-year annual coupon bond with $40

Suppose the 1-, 2-, and 3-year spot rates are 2.5%, 2.75%, and 3.25%. What is the price of a 3-year annual coupon bond with $40 coupon payments?

What is the bond's yield to maturity? If you observe the bond trading at a price of $1,030, do you have an arbitrage opportunity? If so, please describe it.

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