Examlex
Which is an important aspect of the perfectly competitive market that leads to long run equilibrium?
Risk Premium
The extra return expected by an investor for holding a risky asset instead of a risk-free asset, serving as compensation for bearing additional risk.
Arbitrage Opportunity
An arbitrage opportunity is the chance to buy an asset at a low price in one market and sell it at a higher price in another, taking advantage of the price difference for profit.
Expected Return
The anticipated amount of returns an investment is expected to generate, calculated as a weighted average of possible returns, based on their probabilities.
Risk-free Rate
The theoretical return on an investment with zero risk, often represented by the yield on government securities like U.S. Treasury bills.
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