What arbitrage opportunity is available for an investment


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

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Finance Basics: What arbitrage opportunity is available for an investment
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