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(7) Martin Maradiaga was considering two bond offerings for purchase on March 1, 1995. Each had a purchase price of $10,000. Bond A was an "inf adjusted" 4% ten-year $10,000 bond with annual coupons, the coupon pay- ments were to be based on March 1, 1995 dollars so that the inflation-adjusted coupon rate was 4% and the bond would be redeemable at an amount worth $10,000 in March 1, 1995 dollars. Bond B was a 7% ten-year $10,000 par- value bond with annual coupons offered by Delta Diagnostics. Which should Mr. Maradiaga purchase if he forecasts that inflation will be at a level rate of 2.75%? Why? If inflation is actually at 2.2%, find the inflation-adjusted yield on each bond. (6