Question: A trader takes a short position in a one year forward contract on a 31-year Treasury Bond. The Treasury Bond to be delivered in 1-year

A trader takes a short position in a one year forward contract on a 31-year Treasury Bond. The Treasury Bond to be delivered in 1-year is assumed to have an 8% coupon rate and a par value of 100. Using a flat term structure with continuously compounded annual return of 6%. Construct a strategy from which an investor can earn a riskless profit. Assume the 1-year forward price on the bond is $125

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