The process that quickly eliminates price discrepancies in efficient markets is known as
A) arbitration.
B) market correction.
C) arbitrage.
D) random fluctuation.

Question

Quizplus · Accepted Answer

Arbitrage is the process that exploits price discrepancies across different markets or forms for a quick profit, thus eliminating the discrepancy. It contributes to market efficiency by ensuring prices do not significantly differ across markets for the same asset.

The Process That Quickly Eliminates Price Discrepancies in Efficient Markets