Arbitrage Is Based on the Idea That ________

question 70

Multiple Choice

Arbitrage is based on the idea that ________.

• A) assets with identical risks must have the same expected rate of return
• B) securities with similar risk should sell at different prices
• C) the expected returns from equally risky assets are different
• D) markets are perfectly efficient

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Definitions:

Product Concentration

The amount of product formed in a reaction per unit volume or mass of the reaction mixture.

Equilibrium

A state in which opposing forces or influences are balanced, often used in the context of chemical reactions or physical processes reaching a state of balance.

Equilibrium Constant

A numerical value that represents the ratio of the concentrations of products to reactants at equilibrium in a chemical reaction.