Behaviouralists point out that even if market prices are ________ there may be ________.
A)distorted; limited arbitrage opportunities
B)distorted; fundamental efficiency
C)allocationally efficient; limitless arbitrage opportunities
D)distorted; allocational efficiency

Question

Quizplus · Accepted Answer

Behaviouralists argue that market prices could be distorted even when there are limited arbitrage opportunities. This is because market participants may not always act rationally, and their irrational behavior can lead to market inefficiencies. Thus, even if there are opportunities to exploit the mispricing, investors may not always be able to do so.

Behaviouralists Point Out That Even If Market Prices Are ________