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What arbitrage opportunity is available for an investment

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Reference no: EM133021599

Question - The yield to maturity (YTM) on 1-year-zero-coupon bonds is 5% and the YTM on 2-year-zeros is 6%. The yield to maturity on 2 year maturity coupon bonds with coupon rates of 12% (paid annually) is 5.8%. What arbitrage opportunity is available for an investment baking firm? What is the profit on the activity?

Reference no: EM133021599

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