4. Consider the noise trader model of DeLong et alia. (10) a. Derive the effect on...
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4. Consider the noise trader model of DeLong et alia. (10) a. Derive the effect on the stock price p, if there is a fall in u, the percentage of noise traders in the market; assume pt > p > 0. Also in a sentence provide an economic explanation for the effect. (10) b. Derive the effect on the stock price p, if there is a fall in conditional variance o?. Also in a sentence provide an economic explanation for the effect. 4. Consider the noise trader model of DeLong et alia. (10) a. Derive the effect on the stock price p, if there is a fall in u, the percentage of noise traders in the market; assume pt > p > 0. Also in a sentence provide an economic explanation for the effect. (10) b. Derive the effect on the stock price p, if there is a fall in conditional variance o?. Also in a sentence provide an economic explanation for the effect.
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