The Law of One Price Posits That Ability to Arbitrage

question 43

Multiple Choice

The law of one price posits that ability to arbitrage would force prices of identical goods to trade at equal prices.However, empirical evidence suggests that __________ are often mispriced.

• A)Siamese twin companies
• B)equity carve-outs
• C)closed-end funds
• D)Siamese twin companies and closed-end funds
• E)All of the options

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Definitions:

Master Budget

An integrated set of financial plans that outlines a company’s financial and operational goals for a specific period, including various component budgets like sales, production, and cash budgets.

Finished Goods Inventory

The total value of all completed products that have not yet been sold by the company.

Direct Labor

The cost of wages for employees who are directly involved in the production of goods or the provision of services.

Cash Collections

The process of receiving and processing payments from customers or debtors.