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Adam is a surgeon and suffers from an overconfidence bias. He likes to gamble on the stock market and believes keen on his own predictions.
Adam is a surgeon and suffers from an overconfidence bias. He likes to gamble on the stock market and believes keen on his own predictions. In fact, he is poorly informed, like most investors. A rumor that Signe Vito (a start-up that manufactures labels for the medical industry) will be the subject of a buyout offer at $ 20 per share. If the buyback does not have instead, the share price will be $ 15. This uncertainty will be resolved in the coming hours. Adam is confident that the redemption will take place and has instructed his broker to buy the stock at any price as long as it stays below $ 20. In fact, the real probability that the purchase will take place is 50%, but a handful of people are informed and know whether the redemption will take place or not. They also placed orders. No one else buys this Action. a) Describe the evolution of the market price after these orders have been placed if the redemption takes place in a few hours. How will Adam benefit: positive, negative or no ? Adam is a surgeon and suffers from an overconfidence bias. He likes to gamble on the stock market and believes keen on his own predictions. In fact, he is poorly informed, like most investors. A rumor that Signe Vito (a start-up that manufactures labels for the medical industry) will be the subject of a buyout offer at $ 20 per share. If the buyback does not have instead, the share price will be $ 15. This uncertainty will be resolved in the coming hours. Adam is confident that the redemption will take place and has instructed his broker to buy the stock at any price as long as it stays below $ 20. In fact, the real probability that the purchase will take place is 50%, but a handful of people are informed and know whether the redemption will take place or not. They also placed orders. No one else buys this Action. a) Describe the evolution of the market price after these orders have been placed if the redemption takes place in a few hours. How will Adam benefit: positive, negative or no
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