You are given the following information about four bonds traded in the market: Coupon rate Time to maturity (years) Bond A Price 10% 99 1 B 10% 96 2 C D 8% 97 3 7% 97 4 a) Find the spot rates in the given market. State all necessary assumptions. b) Estimate the expected spot rate for a two year investment that will be made in the end of the second year. c) Suppose bond N is currently traded at the market at a price of 95. Bond N has a coupon rate of 8% and 3 years to maturity. Are there any arbitrage opportunities? If yes, provide a detailed strategy to obtain an arbitrage profit. d) Find the yield to maturity of bond N directly and using approximation. What is the intuition behind the approximation formula? Are there any limitations of the approximation formula?