The Process by Which Investors Seek to Profit by Simultaneously

question 286

Multiple Choice

The process by which investors seek to profit by simultaneously selling an asset with a lower rate of return and buying an otherwise identical asset with a higher rate of return is known as

• A) hedging the market.
• B) passive fund management.
• C) arbitrage.
• D) portfolio balancing.

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Definitions:

Lessee

A person or entity that leases an asset from another, the lessor, under the terms of a lease agreement, gaining the right to use the asset for a specified period in exchange for regular payments.

Business Expense

Monetary outlays or costs that are necessary for a company to operate and conduct its business activities.

Leasing Arrangement

A contractual agreement where a lessor allows a lessee to use an asset in exchange for periodic lease payments.

Encumbered Assets

Assets that are used as security or collateral for a loan or debt, restricting their free use or disposal by the owner.