You would like to create a three-year syntheic zero-coupon bond.Assume you are aware of the following information.One-year zero-coupon bonds are trading $0.95 per dollar of face value,two-year zero-coupon bonds are trading $0.90 per dollar of face value,three-years zero-coupon bonds are trading $0.87 per dollar of face value and three-year 10% coupon bonds are selling at $1062.74(face=$1000)

(1) What are the four cash flows from the three-year coupon bond?

(2) Assume you can purchase a three -year 10% coupon bond and unbundle the four cash flows and sell them all.

A. How much will you receive from the sale of the four Treasury strips

B. In this case,unbundle the three-year 10% coupon bond is a good idea?Why?