Question: Use the following information about default - free zero - coupon bonds t o answer the question below. Maturity ( y e a r s

Use the following information about default-free zero-coupon bonds to answer the question below.
Maturity (years)12345
YTM3.25%3.50%3.90%4.25%4.40%
Suppose that a two-year default-free bond paying 5% coupons annually is currently trading at par.
Is there an arbitrage? Ifso, what isit?If not, explain why not. Assume a face value of $1,000.

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