Arbitrage causes all ﬁnancial assets
A) of the same risk level to have the same price.
B) to have the same expected rate of return.
C) to have the same beta.
D) of the same risk level to have the same average expected rate of return.

Question

Quizplus · Accepted Answer

Arbitrage ensures that financial assets with the same risk level have the same average expected rate of return, as differences would be exploited until they are equalized.

Arbitrage Causes All ﬁNancial Assets