Question: Please show as much work as possible, it was advised house excel. 2. Consider the following bonds currently traded in the market. Using this information

Please show as much work as possible, it was advised house excel.

2. Consider the following bonds currently traded in the market. Using this information find the no-arbitrage price of a 5-Year bond with a coupon of 5%. Suppose this bond is currently selling for $102 in the market. Is there an arbitrage opportunity? Show how you would execute this arbitrage i.e. the write down the steps, the cash flows at each period and show the arbitrage profit resulting from the cash flows? (All coupons are annual payment, including the bond you are asked to price)

	Annual Coupon	Maturity in Years	Price
Bond 1	8%	1	102.800
Bond 2	9%	2	107.250
Bond 3	11%	3	116.400
Bond 4	6%	4	104.410
Bond 5	7%	5	108.030
Bond 6	8%	6	113.950
Bond 7	10%	7	127.020

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