Suppose an asset has value 110 with probability 0.5 and 90 with probability 0.5. Noise traders buy or sell x units of the asset with equal probability, and an informed trader with perfect knowledge of the asset value decides to buy y units of the asset if the value is 110 and sell z units of the asset if the value is 90. A risk neutral competitive market maker observes x and y or z, and sets a price p which clears the market. Derive the expected profits for the informed trader as a function of the absolute value of the noise traders, trading volume lxl. Explain why the profits are increasing in I Suppose an asset has value 110 with probability 0.5 and 90 with probability 0.5. Noise traders buy or sell x units of the asset with equal probability, and an informed trader with perfect knowledge of the asset value decides to buy y units of the asset if the value is 110 and sell z units of the asset if the value is 90. A risk neutral competitive market maker observes x and y or z, and sets a price p which clears the market. Derive the expected profits for the informed trader as a function of the absolute value of the noise traders, trading volume lxl. Explain why the profits are increasing in