It Is the Nature of Arbitrage to Even Out Excessive

question 73

True/False

It is the nature of arbitrage to even out excessive fluctuation by destroying its own profitability.

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Definitions:

Yield-to-Maturity

The total expected return on a bond if the bond is held until its maturity date, considering all interest payments and the repayment of principal.

After Tax

Pertains to the amount of money left over or the value of transactions after all applicable taxes have been subtracted.

Perpetuity Rate of Return

The rate at which an infinite series of cash flows, received indefinitely, is discounted to equate its present value.

Stated Dividend

The amount of dividend that a company declares to be paid out to its shareholders, usually expressed as a fixed amount per share.