For heavily traded assets like stocks and bonds, arbitrage:
A. will equalize rates of return across all stocks and bonds.
B. will drive up rates of return on all assets.
C. is a lengthy process because of the large volume of transactions.
D. will often equalize rates of return among similar assets within minutes.
D. will often equalize rates of return among similar assets within minutes.
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The principle of comparative advantage essentially states that
A) there are some goods for which the opportunity costs of production are the same regardless of who produces them. B) some goods have high opportunity costs and low absolute costs. C) specialization can reduce output rather than increase it. D) total output of an economic system is greatest when each good is produced by those who have the lowest opportunity cost of producing the good.
A reduction in the reserve ratio, ?, will cause
A) an increase in the monetary base (H). B) a reduction in H and a reduction in the money multiplier. C) an increase in the money multiplier. D) a reduction in the money multiplier.