An Arbitrage Related Strategy in Which You Substitute a Low

question 8

Multiple Choice

An arbitrage related strategy in which you substitute a low yield position for one with a higher return is called a .

• A) Cash-and-carry
• B) Cash-and-carry arbitrage
• C) Quasi-arbitrage-carry
• D) Quasi-arbitrage

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Definitions:

Competitive Market

A market structure characterized by many buyers and sellers, where no single entity has the power to influence market prices.

Profit

Profit is the financial benefit realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in maintaining the activity.

Short-Run Equilibrium

A situation in a market where demand equals supply, resulting in a stable price level, but which may not reflect long-term market dynamics.

Competitive Price-Taker

A rephrased scenario where businesses in competitive markets accept the prevailing market price as given because they have no power to influence it.