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:

Two-Way Mirror

A mirror that is reflective on one side and transparent on the other, often used in observational research or police lineups.

Social Sciences

The branch of science devoted to the study of societies and the relationships among individuals within those societies.

Lobbying Group

An organization that seeks to influence political decisions in favor of their interests or cause.

Parliament

The supreme legislative body in a country, typically consisting of a lower house (e.g., House of Representatives) and an upper house (e.g., Senate), responsible for making laws.