Please help, I need to understand how to solve this problem without
showing mathematical calculation, so can you explain in writing how to
solve this problem?

a. What spot and forward rates are embedded in the following Treasury bonds? The
price of one-year (zero-coupon) Treasury bills is 93.46 percent.
Assume for simplicity
that bonds make only annual payments. Hint: Can you devise a mixture of long
and short positions in these bonds that gives a cash payoff only in
year 2? In year 3?

Coupon (%) Maturity (years) Price (%)
4             2               94.92
8             3              103.64

b. A three-year bond with a 4 percent coupon is selling at 95.00
percent. Is there a
profit opportunity here? If so, how would you take advantage of it?

Thanks