When a Transaction Takes Place Repeatedly,then One Way to Signal

question 125

Multiple Choice

When a transaction takes place repeatedly,then one way to signal to avoid information asymmetry is:

• A) building a reputation.
• B) screening.
• C) statistical discrimination.
• D) Any of these could be true.

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Definitions:

Probability Distribution

A statistical descriptor that comprehensively outlines all viable outcomes and their likelihoods for a random variable within a set boundary.

Expected Holding-Period Return

The total return anticipated on a bond if it is held until the end of its lifetime or holding period, including interest payments and capital gain or loss.

Probability Distribution

An analytical function that describes every probable value and its likelihood for a random variable over a predefined interval.

Stock of the Economy

The stock of the economy refers to the total value of all assets and investments available within an economy at a given time.