The Action of Arbitrage Is

question 39

Multiple Choice

The action of arbitrage is

• A) the process of buying a currency cheap and selling it dear.
• B) the process of buying a currency dear and selling it cheap.
• C) the process of buying and selling currency at the same price.
• D) the process of selling currency at different prices in different markets.
• E) the process of buying a currency and holding onto it to take it off the market.

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Definitions:

Cost of Equity

The return that a company requires to decide if an investment meets capital return requirements and is often used in financial modeling for valuing a company.

Market Capitalization Rate

The expected rate of return on a portfolio consisting of all publicly traded securities, weighted by market capitalization.

PVGO

Present Value of Growth Opportunities; the portion of a company's stock price that is attributed to its expected earnings growth.

Free Cash Flow

The amount of cash generated by a company after accounting for capital expenditures, necessary to maintain or expand the asset base.