Evaluate the given statement

Reference no: EM131235406

1. Evaluate the following statement: "In a perfect market, no one is getting a good deal. Thus, it would not matter from a social perspective if this market were not available."

2. Can there be a difference in the borrowing and lending rates quoted by the bank in perfect markets?

3. "If the world is risk neutral and the market is perfect, then the promised and expected rates of return may be different, but the expected rate of return on all loans should be equal." Evaluate.

4. A bond will pay off $100 with probability 99%, and nothing with probability 1% next year. The equivalent appropriate expected rate of return for risk-free bonds is 5%.

Reference no: EM131235406

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