You observe the following term structure: 1-year zero-coupon bond 2-year zero-coupon bond 3-year zero-coupon bond 4-year zero-coupon bond Effective Annual YTM 7.2% 7.3 7.4 7.5 a. If you believe that the term structure next year will be the same as today's, calculate the return on () the 1-year zero and (ii) the 4- year zero. (Do not round Intermediate calculations. Round your answers to 1 decimal place.) 96 One year return on 1-year bond One year return on 4-year bond 96 The yield to maturity (YTM) on 1-year zero-coupon bonds is 4% and the YTM on 2-year zeros is 5%. The yield to maturity on 2-year- maturity coupon bonds with coupon rates of 8% (paid annually) is 4.8%. a. What arbitrage opportunity is available for an investment banking firm? The arbitrage strategy is to buy zeros with face values of and and respective maturities of one year and two years. b. What is the profit on the activity? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Profit each bond