Which of the Following Statements Regarding the Law of One

question 11

Multiple Choice

Which of the following statements regarding the Law of One Price is INCORRECT?

• A)At any point in time,the price of two equivalent goods trading in different competitive markets will be the same.
• B)One useful consequence of the Law of One Price is that when evaluating costs and benefits to compute a net present value,we can use any competitive price to determine a cash value,without checking the price in all possible markets.
• C)If equivalent goods or securities trade simultaneously in different competitive markets,then they will trade for the same price in both markets.
• D)An important property of the Law of One Price is that it holds even in markets where arbitrage is not possible.

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Definitions:

McDonald-Kreitman Test

A method used in molecular evolution to compare the ratio of non-synonymous to synonymous substitutions in a gene between species, assessing natural selection.

Homologous Gene

Genetic sequences that are shared by different species and have been inherited from a common ancestor.

Coalescent Events

Theoretical points in time where genetic lineages are assumed to have converged to a common ancestor in population genetics models.