$3.($$$$$)$

Consider the following:

Part a$.$ On trade date $9/16/92$ the Wall Street Journal listed a bid price of $101$:$23$

and an asked price of $101$:$25$ for the $91/8$s of $12/31/92$ for settlement $9/17/92.$ What

are the corresponding bid and asked yields for this government bond?

Part b$.$ On the same trade date, the Journal listed bid and asked discount rates of

$2\mathrm{.}88\%$ and $2\mathrm{.}86\%,$ respectively, for a T $-$bill with exactly the same maturity, $12/31/92,$

for the same settlement, $9/17/92.($This is the bill of Example $14$ in Appendix A

titled $$Interest Rate Quotes and Conventions.$)$ Is there an arbitrage opportunity?

$($The terms $$bid$$ and $$asked$$ are from the point of view of the dealer; you sell at

the bid price and buy at the asked price.$)$