Which of the Following Statements Regarding the Law of One

question 75

Multiple Choice

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

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

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Definitions:

Direct Experience

Direct experience refers to knowledge or competency gained through personal involvement or participation, as opposed to learning through observation or second-hand information.

Accessible Attitude

Accessible attitude refers to an attitude that is easy to recall from memory due to its frequency of activation or the strength of associated beliefs and experiences.

Correspond With Behaviour

To match or align with actions; the degree to which stated beliefs or attitudes are reflected in one’s actions.

Recall

The act of retrieving information or memories from the past without the aid of external cues.