You have data on prices of two level-coupon bonds. Both of them have two years to maturity, face value of $1,000 and pay annual coupons. The first bond pays a 5% coupon and sells for $1,000.92, and the second one pays a 1% coupon and sells for $925.81. You also know that the price of a three-year zero-coupon bond with face value of $1,000 is $816.30. (a) Using any approach you want, determine the term structure of the spot interest rates and the term structure of the forward rates. (b) Suppose that a bank offers you a forward rate of f3 = 9%. If there is an arbitrage opportunity, describe how you would take advantage of it. (c) Determine the prices of the 1- and 2-year zero-coupon bonds with face value of $1,000. (d) Suppose there is a 3-year level-coupon bond with coupon rate of 10% and face value of $1,000 currently trading at $1,000. Describe an investment strategy that uses this level-coupon bond along with the three zero-coupon bonds to earn an arbitrage profit .