The Net Effect of Arbitrage Buying Is to Increase the Price

question 12

True/False

The net effect of arbitrage buying is to increase the price while also increasing the probability that the company will be taken over.

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Definitions:

Decreasing Opportunity Costs

A situation in which the opportunity costs of resources decrease as the production of one good increases, often due to factors like improved technology or specialization.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen, representing the value of the best missed opportunity.

Tractors

Agricultural machinery used for plowing, tilling, planting, and other farming operations.

Bicycles

Human-powered, pedal-driven vehicles with two wheels attached to a frame, one behind the other, used for transportation, recreation, or sport.