QUESTION 10 Consider a sequential trade model in which a security has an uncertain value. The value V of the security can either be $150 or 5250 with equal probability. The proportion of informed traders is 60%, whereas the proportion of liquidity traders is 40%. As usual, liquidity traders buy or sell with equal probability, whereas informed traders only buy when they know the security price is high, and sell when they know the security price is low. The probability that V = $150, conditional that the first trade is a buy, is: a. P[V = 150 Buy] = 0.2 b.P[V = 150 Buy] = 0.3 OCPV = 150 Buy] =0.5 O d. PLV = 150 | Buy] = 0.7 O e P[V = 150 Buy] =0.8 Of. None of the above. QUESTION 11 Consider a sequential trade model in which a security has an uncertain value. The value of the security can either be $150 or $250 with equal probability. The proportion of informed traders is 60%, whereas the proportion of liquidity traders is 40%. As usual, liquidity traders buy or sell with equal probability, whereas informed traders only buy when they know the security price is high, and sell when they know the security price is low. The probability that V = $250, conditional that the first trade is a buy, is: O a. P[V = 250 Buy] = 0.2 b. P[V = 250 Buy] = 0.3 OP[V=250 Buy] =0.5 O d. P[V = 250 Buy] = 0.7 O e P[V - 250 Buy] = 0.8 OF. None of the above. QUESTION 10 Consider a sequential trade model in which a security has an uncertain value. The value V of the security can either be $150 or 5250 with equal probability. The proportion of informed traders is 60%, whereas the proportion of liquidity traders is 40%. As usual, liquidity traders buy or sell with equal probability, whereas informed traders only buy when they know the security price is high, and sell when they know the security price is low. The probability that V = $150, conditional that the first trade is a buy, is: a. P[V = 150 Buy] = 0.2 b.P[V = 150 Buy] = 0.3 OCPV = 150 Buy] =0.5 O d. PLV = 150 | Buy] = 0.7 O e P[V = 150 Buy] =0.8 Of. None of the above. QUESTION 11 Consider a sequential trade model in which a security has an uncertain value. The value of the security can either be $150 or $250 with equal probability. The proportion of informed traders is 60%, whereas the proportion of liquidity traders is 40%. As usual, liquidity traders buy or sell with equal probability, whereas informed traders only buy when they know the security price is high, and sell when they know the security price is low. The probability that V = $250, conditional that the first trade is a buy, is: O a. P[V = 250 Buy] = 0.2 b. P[V = 250 Buy] = 0.3 OP[V=250 Buy] =0.5 O d. P[V = 250 Buy] = 0.7 O e P[V - 250 Buy] = 0.8 OF. None of the above
