You work for the private banking division of Cypress Bank Inc., providing sophisticated investment products to high net-worth individuals. One of your clients wants a 5-year forward contract to buy 10 Bank 10 Y bonds.

The "Cypress 10 Y bond provides a 2% annual coupon paid semi-annually on a principal of $100000. The first coupon payment is expected in exactly 3 months, and the current price of the bond is $90395.

Using the risk-free (all rates are per annum with continuous compounding) interest rate information provided in the table below answer the following questions (25 points)

1. Obtain the forward price of one bond.
2. What is the value of the contract? Risk free rate term structure.
3. Are there any arbitrage opportunities if the market forward price is 99,000? If so, show all the transactions needed to make this arbitrage opportunity. (You MUST show all the cash flows in the transactions).