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44. Insider trading expands the size of the market.
a. True
b. False
Step by step
Solved in 1 steps
- 30. Which ethical standard most closely supports insider trading restrictions?a. Utilitarianismb. Human Rightsc. Justiced. Caring1) A key difficulty facing insurance companies is that people know more about their health than do insurance companies, and that those people who are seriously ill are the most likely to want to obtain health insurance. What is this phenomenon called? A) moral hazard B) economic irrationality C) asymmetric information D) adverse selection 2) An insurance company is likely to attract customers like Clancy who want to purchase insurance because he knows better that the company that he is more likely to make a claim on a policy. What is the term used to describe the situation above? A) moral hazard B) adverse selection C) asymmetric information D) economic irrationality 3) The term that is used to refer to a situation in which one party to an economic transaction has less information than the other party is A) inefficient market hypothesis. B) moral hazard. C) information disparity. D) asymmetric information. 4) Which of the following parties is…You are on the board of directors of a private high school, which is hiring new tenth-grade science teachers. As you think about hiring someone for a job, what are some mechanisms you might use to overcome the problem of imperfect information?
- What are some ways a seller of labor (that is, someone looking for a job) might reassure a possible employer who is faced with imperfect information?1. What is an example of a company that uses a signal to help sell its product. What is the signal? 2. What information is the signal trying to convey? 3. Is the signal effective? Why or why not?Hi just wanting answer to c using the information from the first pciture. Cheers
- 27. Which of the following best describes why insider trading is said to be unethical?a. The theft of information gives the insider an unfair advantage in the organization and the markets.b. The theft of information can change the value of the stock so that it reflects the true value of the organization.c. Insider trading harms relationships between the organization and its customers.d. Insider trading increases society’s overall utility by increasing the size of the market.5. Explain how imperfect information problems such as adverse selection and moral hazard might affect the following markets or situations (also identify the problem whether adverse selection or moral hazard or both of them) a. Workers report medical history for health insurance. b. The market for used car. c. The market for automobile collision insuranceHow can imperfect information distort markets (i.e. make them less efficient)?
- a) Suppose an insurance company decides to insure the earnings obtained by a professional tennis player (in the event of an injury), provided she does not engage in activities like skydiving or skiing. Which asymmetric information problem is the insurance company trying to avoid? b) How do insurance companies protect themselves against losses due to adverse selection and moral hazard? c) How do insurance companies price their products to solve the problem of asymmetric information?The concept of market efficiency applies only in the financial market. True or False?Explain how a company can fail when the safeguards that should be in place fail.
