Arbitrage traders
A) Can only function in efficient markets
B) Tend to be irrational investors
C) Is a term applied to all investors who buy stock and resell it at a higher price
D) Make the market more efficient
E) Trade only those securities that are under-priced

Question

Quizplus · Accepted Answer

Arbitrage traders take advantage of pricing inefficiencies in the market and, by doing so, bring prices closer to their true value. This, in turn, makes the market more efficient by reducing pricing disparities. Therefore, choice D is the correct answer.

Arbitrage Traders