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________ Occurs When Market Participants Observe Returns on a Security

question 95

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________ occurs when market participants observe returns on a security that are larger than what is justified by the characteristics of that security and take action to quickly eliminate the unexploited profit opportunity.


Definitions:

Demand Curve

A visual graph demonstrating the relationship between the cost of a product or service and how much of it is sought after during a particular timeframe.

Service

Economic activity where an intangible value is provided, such as healthcare, education, or entertainment, as opposed to producing a tangible product.

Substitute Goods

Products or services that can be used in place of each other. When the price of one falls, the demand for the other falls, and conversely with an increase of price.

Equilibrium Price

Equilibrium Price is the price point at which the quantity of goods supplied equals the quantity of goods demanded in a market.

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