Which is NOT true about the weak, semi-strong, and strong forms of the efficient markets? Under the weak form, only historical information is reflected in asset prices. Under the semi-strong form, both past and currently known information is reflected in prices. Under the strong form, all information, past and present, publicly known and private, is reflected in prices. Under all forms, price levels are quickly impacted by new information.

Which describes a situation with information symmetry? None of the above. The seller knows more about the true value and price of a product than the buyer The buyer and seller both know the true value and price or a product, but the buyer lacks sufficient funds to buy it All of the above. The sellers lack sufficient funds to produce a product, even when buyers are willing and able to purchase it

Determine which of the two investment projects of Problem 5 the manager should choose if the discount rate of the firm is 30 percent. Additional information. Problem 5 states determine which of two investment projects a manager should choose if the discount rate of the firm is 10 percent. The first project promises a profit of $100,000 in each of the next four years, while the second project promises a profit of $75,000 in each of the next six years.

Which of the following would help an insurance company to overcome the adverse selection problem? Ability to sort individuals into risk groups and charge different premiums A government requirement that people buy insurance Both of these

Each stock listed on the New York Stock Exchange is allocated to a specialist, who is responsible for maintaining an orderly market. This person has a specific location on the floor of the exchange known as

List two possible solutions private insurance firms have at their disposal to correct the market failure due to the asymmetry of information...

Consider a financial market with two assets: peaches and lemons. The fraction of lemons in the economy is λ = 0.4. Buyers value peaches at up = $20 and lemons at v= $10. Sellers value peaches at vs = $16 and lemons at vi = $8. Sellers have all the bargaining power when setting prices at which assets trade. a) Assume both buyer and sellers can perfectly observe the quality of assets in the market. At what price will lemons and peaches trade? b) Now assume that the quality of assets is unobservable, but that buyers and sellers have symmetric information. That is, neither sellers or buyers can tell whether a particular asset is a lemon or a peach. What is the (pooling) price P* at which assets trade? c) Now assume that only sellers can observe the quality of assets, so that there is asym- metric information between buyers and sellers. Explain (intuitively, without equations) why the quality of assets traded in equilibrium will now depend on the price. d) Calculate the share of lemons that…

Most people do not steal because:         the marginal utilities of stolen goods diminish as more of them are                   obtained.        the marginal utilities of stolen goods are negative.        their marginal costs, including guilt costs, are too high.        stolen goods can be sold only at deep discounts.