Arbitrage occurs when
A)bond and stock rates of return equalize.
B)investors try to profit from selling a lower rate of return asset to buy one that is nearly identical but with a higher rate of return.
C)rates of return across all stocks equalize.
D)investors move from lower to higher rate of return assets, regardless of the comparability of the assets.

Question

Quizplus · Accepted Answer

Arbitrage involves taking advantage of price differences between similar or identical assets by selling the lower return asset and buying the higher return one to profit from the discrepancy.

Arbitrage Occurs When