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:

Flexible Budgets

A budget that adjusts or flexes with changes in volume or activity, allowing for a more accurate comparison of actual spending with budgeted amounts for different levels of activity.

Actual Overhead

The real costs incurred for indirect materials, labor, and expenses in operating a business.

Budgeted Manufacturing

The process of estimating the costs of production for a specific period, including materials, labor, and overhead.

Relevant Range

The band of production or activity levels within which the assumptions about cost behavior for a company remain valid.