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Alice wants to buy a security from Bob. The security is a claim on the assets of a financially distressed firm. She values the secunity
Alice wants to buy a security from Bob. The security is a claim on the assets of a financially distressed firm. She values the secunity E1.00 if the firm's problem is just short ierm iliquidity and E0 if the firm is insolvent. Bob, who is perfectly informed on whether the firm is solvent or not, values the security 80p if the firm is just iliquid and 20 if the firm is insolvent. Which of the Alice wants to buy a security from Bob. The security is a claim on the assets of a financially distressed firm. She values the secunity E1.00 if the firm's problem is just short ierm iliquidity and E0 if the firm is insolvent. Bob, who is perfectly informed on whether the firm is solvent or not, values the security 80p if the firm is just iliquid and 20 if the firm is insolvent. Which of the
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