The Law of One Price Posits That Ability to Arbitrage

question 32

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 are correct.

Recognize the advantages and disadvantages of using a plantwide overhead rate for overhead cost allocation.

Understand the concept of cost pools and how they are used in overhead cost allocation.

Acknowledge the influence of cost assignments on management's pricing and product decisions.

Recognize the importance of accurately allocating overhead costs and the impact of different allocation methods on product cost accuracy.

---

Definitions:

Asch

Asch is most likely a reference to Solomon Asch, a psychologist known for his research on conformity, demonstrating how group pressure can influence an individual to conform.

Genetic Counselors

Healthcare professionals who advise individuals and families on the genetic aspects of diseases and conditions, including risks, inheritance patterns, and testing options.

Genetic Disorder

A condition caused by abnormalities in an individual's DNA, which can result in physical or mental developmental issues, inherited in various patterns from one's parents.

Favorable Genes

Genetic traits that are advantageous to an organism's survival and reproduction, often highlighted in discussions of genetic inheritance and natural selection.