When the Law of One Price Is Violated in That

question 36

Multiple Choice

When the law of one price is violated in that the same good is selling for two different prices,an opportunity for what type of transaction is created?

• A)return-to-equilibrium transaction
• B)risk-assuming transaction
• C)speculative transaction
• D)arbitrage transaction
• E)none of the above

---

Definitions:

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing company, reducing the amount of outstanding stock on the balance sheet.

Bonds Payable

A financial obligation represented by a bond issued by a company, promising to pay back with interest the borrowed funds.

Accounts Payable

The amount owed by a business to its suppliers or vendors for goods and services purchased on credit.

Accrual Basis

An accounting method that records income and expenses when they are earned or incurred, regardless of when cash is exchanged.