Question $4$ Consider the following numerical example for adverse selection. There are two

projects A and B$,$ and the investment of these projects are funded by bonds. Both projects

need investment of $100.$ Project A earns $135$ for sure. Project B earns $150$ with probability

$\frac{2}{3}$ and $0$ with $\frac{1}{3}.$ There's an investor requiring an expected return of $10\%.$ Answer the

following questions.

a$.$ Suppose there is symmetric information. That means the investor is able to discern

which project the fund is used to support. Which project will be financed? Why?

b$.$ Suppose there is asymmetric information, that is$,$ investor cannot tell whether the

bond is to support project $A$ or project $B.$ What is the required interest rate charged

by the investor? Which project will be financed? Why?