2. Consider the example of a Myers and Majluf equilibrium that we worked out in the lecture. As in the lecture, assume that I = 1 and that p = 1/2. Change the other parameters of the example as follows: aG = 3/2, aB = 1, bG = bB = 1/8. Use these numbers to answer the following questions:

a. Does an equilibrium exist in which the manager issues equity and invests both when the state is G and when the state is B?

b. Does an equilibrium exist in which the manager issues equity and invests when the state is B but not when the state is G?

c. Does an equilibrium exist in which the manager issues equity and invests when the state is G but not when the state is B?

d. Does an equilibrium exist in which the manager never issues equity and invests?