Which of the Following Statements Regarding the Law of One

question 47

Multiple Choice

Which of the following statements regarding the Law of One Price is incorrect?

• A) At any point in time, the price of two equivalent goods trading in different competitive markets will be the same.
• B) One useful consequence of the Law of One Price is that when evaluating costs and benefits to compute a net present value, we can use any competitive price to determine a cash value, without checking the price in all possible markets.
• C) If equivalent goods or securities trade simultaneously in different competitive markets, then they will trade for the same price in both markets.
• D) An important property of the Law of One Price is that it holds even in markets where arbitrage is not possible.