Considering the law of one price, evidence in the foreign exchange markets over brief intervals shows:
A) the law works most of the time.
B) this is the closest thing to a perfect law in economics.
C) that the law fails most of the time.
D) the law only works in the very short run.

Question

Quizplus · Accepted Answer

The law of one price often fails in foreign exchange markets due to factors like transaction costs, market imperfections, and short-term fluctuations, leading to deviations from the law over brief intervals.

Considering the Law of One Price, Evidence in the Foreign