medium · Market Microstructure adverse-selection
An informed trader in the Kyle model expects to make a profit.
Which of the following factors, if increased, would directly increase the informed trader's expected profit?
- The transparency of the limit order book.
- The standard deviation of noise trader order flow (σ_u).
- The efficiency of the market maker's pricing rule (λ).
- The number of other informed traders in the market.
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