Arbitrage Traders

question 48

Multiple Choice

Arbitrage traders:

• A)tend to be well capitalized.
• B)tend to be irrational investors.
• C)are dominated by irrational investors in an efficient market.
• D)lower the efficiency level of a market.
• E)sell only relatively inexpensive stocks.

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Definitions:

Stockholders' Equity

Ownership interest represented by what’s left of a corporation’s assets once obligations are cleared.

Earnings Per Share

A financial metric indicating the portion of a company’s profit allocated to each outstanding share of common stock, providing insight into the company's profitability.

Average Market Price

The mean price at which a commodity or security is traded over a certain period, reflecting buyers' and sellers' consensus value.

Treasury Stock

Shares that were once a part of the outstanding shares but were bought back by the issuing company, reducing the amount of outstanding stock on the open market.