Given the information in the table below and given that the 2-year spot rate is 10.263%,what is the appropriate action of an arbitrageur?Assume annual coupons and compounding.
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A.The arbitrageur should short the 1-and 2-year zero-coupon bonds and buy the 2-year coupon bond.
B.The arbitrageur should buy the 1-and 2-year zero-coupon bonds and short the 2-year coupon bond.
C.The arbitrageur should buy the l-year zero-coupon and 2-year coupon bond and short the 2-year zero-coupon bond.
D.The arbitrageur should short the l-year zero-coupon and 2-year coupon bond and buy the 2-year zero-coupon bond.
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