Which of the Following Statements Is FALSE

question 30

Multiple Choice

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 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:

Job-Order Costing System

A costing method that assigns costs to specific batches or job orders, making it suitable for customized products.

Predetermined Overhead Rate

An estimated rate used to assign manufacturing overhead costs to products based on a cost driver, calculated before the period begins.

Variable Manufacturing Overhead

Overhead costs that vary with production volume, including indirect labor and utilities.

Direct Labor-Hours

The total hours of labor time directly involved in producing goods or providing services, often used as a basis for allocating manufacturing overhead.