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The yield to maturity (YTM) on 1-year zero-coupon bonds is 7% and the YTM on 2year zeros is 8%. The yield to maturity on 2

The yield to maturity (YTM) on 1-year zero-coupon bonds is 7% and the YTM on 2year zeros is 8%. The yield to maturity on 2 -year-maturity coupon bonds with coupon rates of 11% (paid annually) is 7.7%. a. What arbitrage opportunity is available for an investment banking firm? b. What is the profit on the activity? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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