Please. answer using adverse selection. Consider a firm which plans to go public. There is uncertainty; stock market participants do not know if the firm is high quality (value 100), medium quality (value 50), or low quality (value 0) with each scenario being equally likely. The value of going public equals 10. This number is known to everybody.

(a) Suppose there is genuine uncertainty in the sense that neither the insiders nor the outsiders have an information advantage. What is the value?

(b) Suppose that the insiders know whether firm quality is high, medium, or low. Suppose further that outsiders suspect that insiders have an information advantage. What is the competitive price per share?

(c) Extreme adverse selection has been built into this numerical example. How do yo propose to deal with the problem is a real-world setting?