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.

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Definitions:

Muffled Speech

Speech that is difficult to understand due to distortion or low volume, often a symptom of a medical condition or obstruction.

Cholesteatoma

An abnormal, noncancerous skin growth that can develop in the middle section of the ear, behind the eardrum, often leading to hearing loss.

Otosclerosis

A condition affecting the ear where abnormal bone growth in the middle ear causes hearing loss.

Postmastoidectomy

Pertaining to the period after the surgical removal of mastoid cells, which is part of the temporal bone in the skull.