urgent

Question 2 (10 marks / Arbitrage profit) You observe the following market interest rates for both borrowing and lending: a. One-year rate = 5% b. Two-year rate = 6% One year rate one year from now = 7.25% c. Assume that the expectations theory of interest rates holds and you have $50,000. Can you take advantage of the above rates to earn a riskless profit? Show your steps in detail on how to earn this riskless profit by using $50,000 cash