According to the Law of One Price,in Order for Commodity

question 41

Multiple Choice

According to the law of one price,in order for commodity arbitrage to equalize the price of traded commodities,it is necessary to assume all of the following except?

• A)Zero Transportation cost
• B)No Tariffs
• C)No NTBs
• D)strong differentiation among the traded goods

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Definitions:

Exercise Price

The rate at which an individual possessing an option can execute a purchase (in call option scenarios) or a sale (in put option scenarios) of the underlying asset.

Stock Price

The cost of purchasing a share of a company, which fluctuates based on market demand, company performance, and economic conditions.

Put Option

An option contract in finance that grants the buyer the privilege to sell a specific amount of an underlying asset at an agreed price, within a designated period, without the necessity to proceed.

Strike Price

The predetermined price at which the buyer of a call option can purchase, or the buyer of a put option can sell, the underlying security or commodity.