How would you take advantage of the arbitrage opportunity


Suppose that you observe a three year default security with an annual coupon of 10% and a face value of $1000 and has a value today of 1185.85. Is there arbitrage opportunity?

Year 1. 973.61
Year 2. 942.29
Year 3. 908.06

How would you take advantage of the arbitrage opportunity?

This would result in a net profit of?

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Business Management: How would you take advantage of the arbitrage opportunity
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