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7. A $5,000 corporate bond pays $400 interest twice per year and matures 10 years after it is issued. Time has passed, and there are now 14 months remaining to maturity. (a) If the current market yield on the bond is 5%, then what is its market price (to the nearest dollar)? (b) If the current market price of the bond is $4,900, then what is its yield to the nearest tenth of a percent? (This will require numerical methods of trial and error, rather than a direct calculation. On your exam, it is necessary only to verify that your answer is correct.) 6. (a) What are reasons to believe that the Theory of Efficient Markets is a fairly accurate description of U.S. stock prices? (a) What are reasons to believe that the Theory of Efficient Markets is not a precisely accurate description of U.S. stock prices? 7. A $5,000 corporate bond pays $400 interest twice per year and matures 10 years after it is issued. Time has passed, and there are now 14 months remaining to maturity. (a) If the current market yield on the bond is 5%, then what is its market price (to the nearest dollar)? (b) If the current market price of the bond is $4,900, then what is its yield to the nearest tenth of percent? (This will require numerical methods of trial and error, rather than a direct calculation. On your exam, it is necessary only to verify that your answer is correct.)

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