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:

Theory of Mind

A cognitive skill that enables individuals to understand that others have their own thoughts, feelings, and perspectives, distinct from one's own.

Zone of Proximal Development

The range of tasks that are too difficult for an individual to master alone but can be learned with guidance and assistance from a more knowledgeable person.

Schemata

Cognitive structures that help individuals organize and interpret information in the world around them.

Assimilation

The process by which individuals or groups integrate and adapt to the culture or norms of another group or society.