The market price of a coupon paying bond with $1,000 face value, 2 years to maturity, and 5% annual coupon, is $970.  The price of a 1-year zero-coupon bond is $947.77 and that of a 2

year zero-coupon bond is $883.44.   Assuming that the zero-coupon bonds are correctly priced which of the following statements are true: 

 I. There is an arbitrage opportunity available 

 II. The coupon bond is mispriced 

 III. The no-arbitrage price of the coupon bond is $955 

 IV. The no-arbitrage price of the coupon bond is $975 

 V.  The coupon bond is fairly priced