Which of These Help Prevent Arbitrage from Totally Correcting Market

question 7

Multiple Choice

Which of these help prevent arbitrage from totally correcting market mispricings?
I.Trading costs
II.Market domination by rational professionals
III.Number of amateur investors
IV.Near-term risk

• A)I only
• B)I and II only
• C)III and IV only
• D)I,III,and IV only
• E)I,II,III,and IV

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Definitions:

Voluntary Contributions

Financial or resource donations given by individuals or entities by choice rather than as a result of taxation or legal obligation.

Public Good

A good that is non-excludable and non-rivalrous, meaning it cannot easily exclude individuals from use, and one individual's consumption does not reduce availability for others.

Radio Broadcasts

The transmission of audio content through radio waves to reach a wide audience.

Clarke Tax Mechanism

A pricing strategy for public goods that charges individuals for the net social cost their consumption imposes on others, aiming to align individual incentives with social welfare.