Question

Do you think the lemons problem would be more severe for stocks traded on the Toronto Stock Exchange or those traded over-the-counter? Select the best answer O A kis more severe for over the counter trades because getting information about these firms is more difficult, making a harder for investors to figure out whether the firm is of good quality or is a lemon OB. tis less severe for firms trading on the Toronto Stock Exchange because they are typically large corporations that are better known in the marketplace OC. The lemons problem means tous informed investors will adversely welect stocks. This risk of doing so is greater for fema trading on the over-the-counter market than on the Toronto Stock Exchange OD. All of the above

Answer 1

Answer

Option d) All of the above

Reason:

The lemons problem refers to issues that arise regarding the value of an investment or product due to asymmetric information possessed by the buyer and the seller.

This problems will be more severe for over-the-counter as there is less information available to the buyers of stocks and less seve for Toronto Stock Exchange as there are proper documentation and verification existing on such an Exchange.