Suppose the current forward rates for the second year and third year are 7% and 8% respectively (i.e.,f2-796, and f3-8%). In addition, the current 3-year spot rate is 9% (ie. r3 -9%). Part A Find the current 1-year and 2-year spot rates (r, and r2) Part B- Given the rates above, find the prices of the 1-year, 2-year, and 3- year zero coupon bonds (each with a face value of $1,000) Part C- Suppose a security pays $500 in one year, $1,000 in two years, and $1,500 in three years. Find the price of this security today Part D Suppose the security described in Part C is priced in the market at $2,500. Using the bonds mentioned in Part B, carefully describe an arbitrage opportunity, and explain how you would use it to capture a free lunch