a) Using your own words describe the efficient markets hypothesis. In describing this hypothesis discuss the extent of the incorporation of information into prices. (MAX 200 words).
b) What is the implication of the efficient markets hypothesis for finance managers and their decision making process?
c) You wish to expand your bond portfolio and have the following information regarding a possible bond investment:
Par: $1,000
Maturity: 4 years
Coupon: 9% per annum
Yield to Maturity: 10% p.a.
If the current market value of the bond is $982.10 would you buy the bond? Why or why not?