Which of the Following Class of Arbitrage Opportunities Is Irrelevant

question 3

Multiple Choice

Which of the following class of arbitrage opportunities is irrelevant for our pricing models?

• A) arbitrage across time
• B) arbitrage across space
• C) the sum of the parts is greater than the whole
• D) the sum of the parts is less than the whole
• E) government granted tax credits

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Definitions:

Confidence Interval

A variety of values obtained from sample data that probably encompasses the value of an unspecified population characteristic.

Margin of Error

An expression of the amount of random sampling error in a survey’s results.

Test Statistic

A calculated value used in statistical testing to determine if the null hypothesis can be rejected.

Distribution

A mathematical description of observed or theoretical frequencies of occurrence of different possible outcomes in a dataset.