If the Assumption of "No Market Frictions" Holds,then Which of the Following

question 9

Multiple Choice

If the assumption of "no market frictions" holds,then which of the following is INCORRECT?

• A) no transactions costs
• B) no margin requirements
• C) no short sales restrictions
• D) no taxes
• E) no credit risk

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Definitions:

Higher Principle

An overarching ethical or moral standard that guides decisions and actions, often prioritized over other considerations.

Charismatic Authority

Based on belief in the claims of extraordinary individuals to be inspired by God or some higher principle.

Legal-Rational Authority

Is typical of modern societies. It derives from respect for the law. Laws specify how one can achieve office. People generally believe these laws are rational. If someone achieves office by following these laws, people respect their authority.

Legitimately Accomplish

To achieve or complete something in a manner that is lawful, ethical, and recognized as proper and valid.