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Consider two securities that pay risk-free cash flows over the next two years and that...

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Finance

Consider two securities that pay risk-free cash flows over the next two years and that have the current market prices shown here:

Suppose a security with cash flows of $ 100 in one year and $200 in two years is trading for a price of $260.

What arbitrage opportunity is available? (Select the best choice below.)

Security Price Today Cash Flow in One Year Cash Flow in Two Years
B1 $188 $200 0
B2 $170 0 $200

Group of answer choices

Sell two shares of the security and buy one share of B1 and two shares of B2.

Sell two shares of the security and buy one share each of B1 and B2.

Buy two shares of the security and sell one share each of B1 and B2

Buy two shares of the security and sell one share of B1 and two shares of B2.

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