If an Identical Product Can Be Sold in Two Different

question 22

Multiple Choice

If an identical product can be sold in two different markets, and no restrictions exist on the sale or transportation of product between markets, the product's price should be the same in both markets. This is known as:

• A) relative purchasing power parity.
• B) interest rate parity.
• C) the law of one price.
• D) equilibrium.

---

Definitions:

Growing Annuity

Cash operations expanding regularly across a set number of intervals.

Cash Flow Growth Rate

The speed at which a firm's cash flow grows within a defined timeframe.

Required Rate

The minimum return that investors expect to earn from an investment to compensate for its risk.