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You observe that the price of a 1-year annuity that pays $100 every 6 months is $180. The price of a 6-month $100 par value

You observe that the price of a 1-year annuity that pays $100

every 6 months is $180. The price of a 6-month $100 par

value zero-coupon bond is $91.7431, and the price of a 1-year

$100 par value zero-coupon bond is $82.6446. All bonds are

issued by the same company, so have the same risk.

Are there any arbitrage opportunities and if yes, how would you take

advantage of them?

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