Bond dealers buy and sell bonds at very low spreads. In other words, they are willing to sell at a price only slightly higher than the price at which they buy. Used-car dealers buy and sell cars at...

Question:
Bond dealers buy and sell bonds at very low spreads. In other words, they are willing to sell
at a price only slightly higher than the price at which they buy. Used-car dealers buy and sell
cars at very wide spreads. What has this got to do with the strong form of the efficient-market
hypothesis?
Answer:
The price of a bond is calculated as the present value of all the expected flow from the bond
(including the coupon payments and the value at maturity), discounted at the expected cost of
capital rate. And if efficient market hypothesis holds (which is...