Question #2: Market Imperfections: TRUE/FALSE/UNCERTAIN: Provide the reason(s): 

CLAIM: “Penny stocks and the used car markets are quintessential examples of the LemonProblem”.

Question #3: Government Role: TRUE/FALSE/UNCERTAIN: Provide the reason(s): 

CLAIM: “There is no role for the government in well-functioning capital markets.”

Question #4: Smart Money vs. Dumb Money: TRUE/FALSE/UNCERTAIN: Provide the reason(s): 

CLAIM I: “Retail traders should adopt short selling similar to institutional traders as it is 1superior and more profitable than buy-hold strategy”. 

CLAIM II: “A fund manager who has outperformed the market over the past ten quarters will outperform the market over the next ten quarters and therefore you should invest all your funds with them.”.

Answer rating: 100% (QA)

2 False The lemon problem refers to a market in efficiency where buyers are unable to reliably assess the quality of a product prior to purchase leading to an imbalance between the quality of products ... View the full answer