There are five treasury bonds with a maturity of five years in the market with the following annual payments and prices: Year YTM Year Bond 1 Bond 2 Bond 3 Bond 4 Bond 4 1 3.093 (%) 1 100 200 50 100 100 2 4.257 (%) 2 100 200 50 100 100 3 4.752 (%) 3 100 200 50 100 100 4 5.737 (%) 4 100 200 50 100 100 h 5 7.934 (%) 5 1100 1200 1050 2100 1600 Price 1126.7 1531.2 894.8 1789.6 1448.3 a. Find a bond that is mispriced. b. Using STRIPS with face value of 50, describe an arbitrage strategy for the mispriced bond.

There are five treasury bonds with a maturity of five years in the market with the following annual a. Find a bond that is mispriced. b. Using STRIPS with face value of 50 , describe an arbitrage strategy for the mispriced bond