Consider Two Securities,A & B

question 86

Multiple Choice

Consider two securities,A & B.Suppose a third security,C,has the same cash flows as A and B combined.Given this information about securities A,B,& C,which of the following statements is INCORRECT?

• A)If the total price of A and B is cheaper than the price of C,then we could make a profit selling A and B and buying C.
• B)Price(C)= Price(A)+ Price(B).
• C)Because security C is equivalent to the portfolio of A and B,by the law of one price they must have the same price.
• D)The relationship known as value additivity says that the value of a portfolio is equal to the sum of the values of its parts.

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Definitions:

Byte

An eight-bit string of data, needed to represent any one alphanumeric character or simple mathematical operation.

4-bit

Refers to computing architecture or data units that are four bits in width, often associated with early computing hardware.

Microprocessor Complexity

Refers to the intricate architecture and numerous functionalities integrated within a microprocessor, determining its processing power, efficiency, and capability.

Moore's Law

The observation that the number of transistors in a dense integrated circuit doubles approximately every two years, leading to continuous increases in computing power.