____________ are good examples of the limits to arbitrage because they show that the law of one price is violated. I) Siamese twin companies
II. Unit trusts
III. Closed-end funds
IV. Open-end funds
V. Equity carve-outs
A)I and II
B)I, II, and III
C)I, III, and V
D)IV and V

Question

Quizplus · Accepted Answer

Siamese twin companies, closed-end funds, and equity carve-outs are good examples of the limits to arbitrage. Siamese twin companies often trade at different values despite having similar assets, highlighting the law of one price violation. Closed-end funds can trade at a premium or discount to their net asset value, showing market inefficiencies. Equity carve-outs can lead to mispricing between the parent and the carved-out company, again illustrating limits to arbitrage.

____________ Are Good Examples of the Limits to Arbitrage Because