# What is the price of the stock as a function of parameters N,M and δ?

Consider the following model of a stock market. There are two groups of traders: rational traders and optimists. There are N rational traders and each has a demand for the stock of 100−P. Suppose that there are 100 shares of the stock outstanding. There are M optimists and each has a demand of 100 +δ−P.

a) What is the price of the stock as a function of parameters N,M and δ?

b) Suppose N=M= 50 andδ= 20, are the rational traders long or short and by how much?

c) Suppose N=M= 50,δ= 20, and there are 100 shares outstanding, again. Also,suppose the rational traders cannot short at all for institutional reasons. For example,they might work for mutual funds: most mutual funds do not allow shorting. Calculate the equilibrium price and the positions of the rational traders and the optimists in this scenario

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.