4. Determinants of security values For decades in the U.S., street vendors have popped up in densely populated areas, such as major cities, beaches, and festivals. These businesses seli things from hamburgers and hot dogs to tacos and Mexican street corn. After the recession hit between 2008 and 2009, the U.S. saw an increase in the number of mobile food businesses, namely an increase in the number of food trucks. Because this is the first time this industry has seen this much growth, suppose Investors took carefully at historical food truck financial records, customer feedback, and any other information they can get their hands on to give them better insight into the industry's potential performance. After Investors review this information, suppose they determine that there is a high likelihood of the businesses generating high cash flows, and thus a high return on their investment, and they revise their valuations of the stocks accordingly. True or False: Given the scenario, the investors are using Information on industry conditions to take their positions on the security True False Use the graph to show what happens to the supply, demand, and equilibrium price in the market for food truck stocks in the short run, assuming that if supply and demand change, they do so simultaneously Secondary market for food truck stocks Supply Demand True or False: Given the scenario, the investors are using Information on Industry conditions to take their positions on the security True False Use the graph to show what happens to the supply, demand, and equilibrium price in the market for food truck stocks in the short run, assuming that if supply and demand change, they do so simultaneously. Secondary market for food truck stocks Supply Demand Supply Price Demand Quantity Now suppose that instead of determining the businesses have a high likelihood of generating high cash flows, Investors determine that there is a high degree of uncertainty surrounding the businesses cash flow generation Now suppose that instead of determining the businesses have a high likelihood of generating high cash flows, Investors determine that there is a high degree of uncertainty surrounding the businesses cash flow generation True or False: Given the scenario, the investors are using information on Industry conditions to take their positions on the security True False Use the graph to show what happens to the supply, demand, and the equilibrium price in the market for food truck stocks in the short run, assuming that if supply and demand change, they do so simultaneously, Secondary market for food truck stocks O Supply Demand -O Supply Price Demand Quantity
