Arbitrage Equalizes Rates of Return Across Similar Investments Because

question 80

Multiple Choice

Arbitrage equalizes rates of return across similar investments because

• A) arbitrage also equalizes the prices of the assets.
• B) investors prefer diversity.
• C) investors will want to replace lower rate of return assets with those generating higher rates of return.
• D) investors will want to replace higher rate of return assets with those generating lower rates of return.

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Definitions:

Increased Awareness

A heightened state of knowledge, consciousness, or understanding about a particular issue, phenomenon, or aspect of one's environment or self.

Mortality

The state of being subject to death; often used in statistics to refer to the rate of death within a population.

Peripheral-Route Cues

Aspects of a message that are not directly related to the content but can influence an individual's attitude change, such as the attractiveness of the speaker.

Central Route Processing

A method of persuasion that involves deeply processing the content of a message, focusing on the arguments and evidence presented.