Imagine that in a given economy there are two types of bonds. The first type is of low quality and its true value is equal to 100 and the second type is of high quality and its true value is equal to 1000. The first type occurs with probability 0.2 and the second with probability of 0.8. Assume that investors are not able distinguish between the two types of bonds. What do you expect the market price to be and what is the composition of bonds actually traded in such a case? Only bonds of high quality are traded and their price is equal to 1000 Bonds of both types are traded and the market price is equal to 820 Only bonds of low quality are traded and their price is equal to 100 Bonds of both types are traded and the market price is equal to 550