The law of one price posits that ability to arbitrage would force prices of identical goods to trade at equal prices. However, empirical evidence suggests that __________ are often mispriced.
A) Siamese twin companies
B) equity carve outs
C) closed end funds
D) Siamese twin companies and closed end funds
E) All of the options are correct.

Question

Quizplus · Accepted Answer

The law of one price posits that ability to arbitrage would force prices of identical goods to trade at equal prices. However, empirical evidence suggests that Siamese twin companies, equity carve outs, and closed end funds are often mispriced.

The Law of One Price Posits That Ability to Arbitrage