Arbitrage Equalizes Rates of Return Across Similar Investments Because

question 80

Multiple Choice

Arbitrage equalizes rates of return across similar investments because

• A) arbitrage also equalizes the prices of the assets.
• B) investors prefer diversity.
• C) investors will want to replace lower rate of return assets with those generating higher rates of return.
• D) investors will want to replace higher rate of return assets with those generating lower rates of return.

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Definitions:

Falsity

Relates to the quality or state of being false or untrue.

Conversion

Any distinct act of dominion wrongfully exerted over another’s personal property in denial of or inconsistent with his rights therein. That tort committed by a person who deals with chattels not belonging to him in a manner that is inconsistent with the ownership of the lawful owner.

Defendant

An individual, company, or institution being sued or accused in a court of law.

Property

Assets or possessions that belong to an individual or entity, encompassing both physical objects and legal rights.