[Verse 1]
In the marketplace where bonds are traded
Prices dance but mustn't stray
If yields between two bonds are faded
Arbitrage will find its way
When a ten-year and a five-year mismatch
Smart investors smell the gold
Buy the cheap one, sell the rich batch
Watch the profits slowly unfold
[Chorus]
No free lunch in bond land
Arbitrage-free is the plan
Consistent pricing across the span
Every maturity, hand in hand
Risk-free profit disappears
When the framework interferes
Market forces engineer
Prices balanced, crystal clear
[Verse 2]
Bootstrap method builds the curve up
Zero rates from coupon bones
Each maturity must line up
Or the market quickly groans
If three-year bonds seem undervalued
Two-year, four-year rates will show
Triangular trades get pursued
Until equilibrium flow
[Chorus]
No free lunch in bond land
Arbitrage-free is the plan
Consistent pricing across the span
Every maturity, hand in hand
Risk-free profit disappears
When the framework interferes
Market forces engineer
Prices balanced, crystal clear
[Bridge]
Forward rates implied and locked in
Present value calculations
Discount factors interlocking
Prevent pricing aberrations
If the math doesn't add up right
Traders pounce within the hour
Buying low and selling tight
Market efficiency has power
[Chorus]
No free lunch in bond land
Arbitrage-free is the plan
Consistent pricing across the span
Every maturity, hand in hand
Risk-free profit disappears
When the framework interferes
Market forces engineer
Prices balanced, crystal clear
[Outro]
Term structure smooth and flowing
Every bond finds proper place
Arbitrage opportunities slowing
Market wisdom sets the pace