“Let's assume that you are an entrepreneur who organizes auction” 1) Which type of auction would you organize? Why? 2) Draw the utility functions of two individuals who are reluctant and willing to participate in this auction. 3) What would you do to transfer the risk in this auction?
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“Let's assume that you are an entrepreneur who organizes auction”
1) Which type of auction would you organize? Why?
2) Draw the utility functions of two individuals who are reluctant and willing to participate in this auction.
3) What would you do to transfer the risk in this auction?
Step by step
Solved in 5 steps
- Define Weak, Semi-Strong and Strong forms of the Efficient Market Hypothesis (EMH). Please answer C and D!!!!! a. How would you construct a test of the Weak form of the EMH? b. What have researchers found when testing the Weak form of the EMH? c. Outline how you would conduct an event study. What efficient market hypothesis are you trying to test? d. Give an example where researchers have used an event study and what did they find? Was it consistent with the EMH?Define Weak, Semi-Strong and Strong forms of the Efficient Market Hypothesis (EMH). a. How would you construct a test of the Weak form of the EMH? b. What have researchers found when testing the Weak form of the EMH? c. Outline how you would conduct an event study. What efficient market hypothesis are you trying to test? d. Give an example where researchers have used an event study and what did they find? Was it consistent with the EMH?This problem, like the first one, is a brain teaser. If a market is efficient, how is it possible for an investor to earn a profit?
- Discuss the Efficient Market Hypothesis. Your discussion should explain each market form, with examples of the type of information that cannot be used to beat the marketWhat is the maximum value that a call can take? Why? Explain which option (i.e. put or call) positions (i.e. long or short) offers the most risk.Explain how the possible profit and loss possibilities arise for an individual who invests in a: a. A Call Option i. Be sure to explain what a Call Option is. ii. Be sure to incorporate the cost of the Call Option in your analysis. b. A Put Option i. Be sure to explain what a Put Option is. ii. Be sure to incorporate the cost of the Put Option in your analysis.
- “JIT purchasing has many benets but also some risks.” Do you agree? Explain briey.Explain how a speculator can make speculation in spot, forward, and options markets. Which one do you think is more advantageous? Explain by making a comparison among these alternatives.Explain how the possible profit and loss possibilities arise for an individual who invests in a: A Call Option, be sure to explain what a Call Option is. Be sure to incorporate the cost of the Call Option in your analysis. A Put Option, be sure to explain what a Put Option is. Be sure to incorporate the cost of the Put Option in your analysis.