Now, let us assume that the realised uninformed trading demand is 60. That is, z=60. Let us also calculate and assume that the informed trader submits the informed trader's equilibrium trading demand (x)

Calculate the dealer's price (p()) if they follow their equilibrium strategy.

a.

Other

b.

$12.00

c.

$10.03

d.

$11.82

e.

$10.00

Consider a Kyle (1985) model set-up in which the true value of the stock is $12.00, the unconditional variance of the true value is 6, the variance of uninformed trading is 8,000 and the expected value of the stock is $10.00 without private information. That is: . F = $12.00 of = 6.00 o = 8,000 F = $10.00 . 1