If You Buy 100 Shares of IBM Stock in Anticipation

question 56

True/False

If you buy 100 shares of IBM stock in anticipation that earnings will increase by more than anticipated,you are engaging in what is termed a risky arbitrage.

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Definitions:

Marginal Cost

The change in total cost that arises when the quantity produced is incremented by one unit; essentially, the cost of producing one more unit of a good.

Product-Variety Externality

An economic effect where an individual's consumption choices can lead to an increase in the variety of products available, potentially benefiting other consumers.

Negative Externality

A cost that affects a party who did not choose to incur that cost, often associated with production or consumption activities.