Find arbitrage trade

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You look up a 15-month bond forward contract and find the following: the current price of the bond is $1200, and the forward price is $1250. It will pay a coupon of $50 in 4 months and 10 months. The annualized, continuously compounded risk free rate is 0.5% for 4 months, 1% for 10 months, and 2% for 15 months. Find an arbitrage trade, and show the profit from your trade.

Reference no: EM132070478

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