Use the Table for the Question(s) Below

question 53

Multiple Choice

Use the table for the question(s) below.

-Which of the following statements is false?

• A) No arbitrage opportunities will exist until the underlying prices diverge by more than the amount of the transaction costs.
• B) Because you will generally pay a slightly lower price when you buy a security (the ask price) than you receive when you sell (the bid price) you will pay the bid-ask spread.
• C) The price of a security should equal to the present value of its cash flows, up to the transaction costs of trading the security and the cash flows.
• D) In most markets, you must pay transactions costs to trade securities.

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Definitions:

Private Organizations

Entities that operate independently of government control, often for profit and not directly funded by the government.

Level of Significance

A threshold set by researchers that determines the probability of rejecting the null hypothesis when it is actually true.

E.coli

A type of bacteria that normally lives in the intestines of humans and animals; some strains can cause illness.

Conventionally Grown Produce

Crops that are cultivated using standard farming practices, often involving synthetic fertilizers and pesticides.