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3. Consider two types of used cars and the following information. DESCRIPTION PEACHES LEMONS Buyer's Value $ 3000 $ 2000 Sellers' Value $ 2500 $

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3. Consider two types of used cars and the following information. DESCRIPTION PEACHES LEMONS Buyer's Value $ 3000 $ 2000 Sellers' Value $ 2500 $ 1000 "Proportions" 3 1 a. Show calculations for the information asymmetry case. Assume risk neutrality. b. Discuss the significance of this example to financial intermediaries. (Hint: see Mishkin) c. Discuss the significance of this example to financial securities. (Hint: see Mishkin)

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