You compiled pricing data for two semi-annual coupon payment Treasury bonds (Table 1). Each of the bonds will mature in two years, the Treasury spot rates are shown in Table 2. (20 marks) Table 1: Market data for selected bonds Asset Coupon Market price Bond A 6% 100.139 Bond B 8% 102.022 Table 2: Treasury spot rates Period Rates Six months 3% One year 4% One and half year 5% Two years 6% 1) Calculate the arbitrage-free prices of Bond A and Bond B (6 marks) 2) Which bond will provide an arbitrage opportunity and what is the arbitrage profit? (1 mark)Next, you want to use the benchmark yield curve provided in Table 3 to identify investment opportunities associated with two annual coupon corporate bonds. The benchmark bonds pay coupons annually and the bonds are priced at par. Table 4 provides the market data of the two corporate bonds. Table 3: Benchmark Par Curve Maturity (years) Yield to Maturity 3% 2 4% 3 5% Table 4: Market data for the corporate bonds Company Coupon Maturity (years) Market price X 6% 3 102.757 Y 8% 3 105.855 3) Calculate the arbitrage-free prices of Bond X and Bond Y (12 marks) 4) Which bond is mispriced and what is the amount of the mispricing? (1 mark)