The Exploitation of Security Mispricing in Such a Way That

question 55

Multiple Choice

The exploitation of security mispricing in such a way that risk-free economic profits may be earned is called

• A) arbitrage.
• B) capital-asset pricing.
• C) factoring.
• D) fundamental analysis.
• E) None of the options are correct.

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Definitions:

Equilibrium

A condition where the supply and demand in the market are in equilibrium, leading to stable prices.

Lemons

In economics, "lemons" refer to products of significantly lower quality that are sold alongside higher-quality products due to asymmetric information between buyers and sellers.

Potential Buyers

Individuals or entities that have shown interest in purchasing a product or service, but have not yet made a purchase.

Rustbucket

A term referring to an old, deteriorating vehicle, especially one suffering from rust and neglect.