________ Occurs When Market Participants Observe Returns on a Security

question 95

Multiple Choice

________ 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.

• A)Arbitrage
• B)Mediation
• C)Asset capitalization
• D)Market intercession

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Definitions:

Total Variable Cost

The sum of all costs that vary with output level, including costs for raw materials, labor, and utilities that increase or decrease as production volume changes.

Average Fixed Cost

The fixed expenses of a company divided by the number of units produced, showing cost per unit.

Average Variable Cost

Average variable cost is the total variable costs of production divided by the quantity of output produced; it changes with production volume.

Marginal Cost

The expenditure required to produce one more unit of a product or service.