Arbitrage Causes All fiNancial Assets

question 171

Multiple Choice

Arbitrage causes all financial assets

• A) of the same risk level to have the same price.
• B) to have the same expected rate of return.
• C) to have the same beta.
• D) of the same risk level to have the same average expected rate of return.

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Definitions:

Sedimentary Rock

Rock formed from the accumulation of sediment, which can be transported by water, wind, or ice, and often contains fossils.

Burial

In geology, this refers to the process of layering sediments on top of each other, which can lead to the formation of sedimentary rocks or the fossilization of organisms.

Compaction

Process by which soil, sediment, and volcanic materials lose pore space in response to the weight of overlying material.

Cementation

The precipitation of a binding material (the cement) around grains in sedimentary rocks.