At the end of the day, PayME stock will be worth 100(80% probability) or 110 (20% probability). A market-maker believes that 90% of her incoming traders are uninformed, and equally likely to buy or sell; the remaining 10% are informed about end-of-day value. At what ask price does the market-maker just break even?

give the correct answer with explanation and calculation .

Answer rating: 100% (QA)

Heres how to calculate the breakeven ask price for the marketmaker Step 1 Define Variables P80 Proba... View the full answer