Arbitrage Is the Process by Which Investors Simultaneously Sell

question 173

Multiple Choice

Arbitrage is the process by which investors simultaneously sell

• A) assets with higher rates of return and buy otherwise identical assets with lower rates of return.
• B) assets with lower rates of return and buy otherwise identical assets with higher rates of return.
• C) riskier assets and buy less risky assets.
• D) less risky assets and buy riskier assets.

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Definitions:

Eyeglasses

Corrective or protective devices worn on the eyes, consisting of lenses mounted in a frame, to improve vision or protect the eyes from damage or light.

Average Variable Cost

The variable cost per unit of output, calculated by dividing total variable costs by the total output.

Average Total Cost

The total cost of production divided by the number of units produced, representing the per-unit cost of production.

Marginal Cost

The increase in cost that results from producing one additional unit of a good or service.