Question 5: (Risk & Return) 3 points a. Define the Capital Asset Pricing Model. b. Explain what a stock's "beta" is. c. If the risk-free rate is 1% and the expected rate of return on the stock market is 9%, what is the required rate of return per the CAPM for a stock that has a beta of 1.3? Question 6: (Bond valuation) 8 points a. Curley's Company's bonds have 10 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 4%. The bonds have a yield to maturity (YTM) of 5%. Given these conditions, what should be the current price of these bonds? b. Larry's Company's bonds have 8 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 4%. The bonds have a current market price of $890. Given these conditions, what should be the yield to maturity (YTM) of these bonds? Question 7: (Stock Valuation) 6 Points a. Define the Efficient Markets Hypothesis. b. Financial theorists generally define three forms of market efficiency: the weak-form, the semi-strong-form, and the strong-form. Explain these three forms. ------------------------------