Question: The spot rates calculated below reflect the years 1 - 4 . Year 1 spot rate: 0 . 0 3 0 9 Year 2 spot

The spot rates calculated below reflect the years 1-4.
Year 1 spot rate: 0.0309
Year 2 spot rate: 0.0489
Year 3 spot rate: 0.0500
Year 4 spot rate: 0.06085
The arbitrage free price: 895.53
The arbitrage profit: 18.89
The yield to maturity is : 5.50%
Based on this information,
Assume that you can invest any amount in STRIPS and that 1-4-year STRIPS are correctly priced based on the spot rates that you have calculated. In order to benefit from the arbitrage opportunity, how much should you invest in a 1-year STRIP?
Assume that you can invest any amount in STRIPS and that 1-4-year STRIPS are correctly priced based on the spot rates that you have calculated. In order to benefit from the arbitrage opportunity, how much should you invest in a 2-year STRIP?
Assume that you can invest any amount in STRIPS and that 1-4-year STRIPS are correctly priced based on the spot rates that you have calculated. In order to benefit from the arbitrage opportunity, how much should you invest in a 3-year STRIP?
Assume that you can invest any amount in STRIPS and that 1-4-year STRIPS are correctly priced based on the spot rates that you have calculated. In order to benefit from the arbitrage opportunity, how much should you invest in a 4-year STRIP?

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