sarajemli1335 sarajemli1335

07-10-2019
Business

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11. Which of the following statements regarding the Law of One Price is INCORRECT? A) At any point in time, the price of two equivalent goods trading in different competitive markets will be the same. B) One useful consequence of the Law of One Price is that when evaluating costs and benefits to compute a net present value, we can use any competitive price to determine a cash value, without checking the price in all possible markets. C) If equivalent goods or securities trade simultaneously in different competitive markets, then they will trade for the same price in both markets. D) An important property of the Law of One Price is that it holds even in markets where arbitrage is not possible.

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Nyctalus Nyctalus

11-10-2019

Answer: Option A

Explanation: As per the law of one price, if two different markets have free operations and no trade restriction in them, then the price of an equivalent or identical goods must be same in both the markets. In such a case, the participants do not have a scope of arbitrage as the price will be same.

Hence from the above we can conclude that the correct option is A.

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