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You observe the following market prices of zero - coupon bonds each with a face value of $ 1 0 0 :You also observe a

You observe the following market prices of zero-coupon bonds each with a face value of $100:You also observe a 10% government coupon bond withTime to Maturity (Years) Price0.5981.096face value of 10,000 dollars, one year to maturity, paying semi-annual coupons. This bond has a marketprice equal to $11,070.a. Your friend claims that the market annual yield to maturity for the coupon paying bond is 4.15%.Is she correct?b. If transactions (buying & selling) can be executed at the prices reported above and you can buyor sell as many zero and coupon bonds as you need, is there an arbitrage opportunity? If so,explain in detail how it can be earned. Be specific as to the amount and timing of cash flows (i.e.,show the cash inflows/outflows for each of the relevant maturity dates).

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