Assume That There Are Two Investments Very Similar in All

question 94

Multiple Choice

Assume that there are two investments very similar in all respects, but Investment X has a higher rate of return than does Investment Y. As a result of the arbitrage process, the price of Investment:

• A) X will fall and its rate of return will fall
• B) Y will rise and its rate of return will fall
• C) X will fall and its rate of return will rise
• D) Y will fall and its rate of return will rise

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Definitions:

Arbitrator

A neutral third party who resolves disputes between labor and management by making decisions that are usually binding on both parties.

Employee

An individual who is hired by an organization or person to perform work under specific terms in exchange for compensation.

Grievance Procedures

Formal processes that allow employees to voice complaints or concerns regarding work conditions, treatment, or policies.

Arbitration

A process of dispute resolution in which an impartial third party, known as an arbitrator, makes a decision to resolve a dispute between two or more parties, often used as an alternative to litigation.