When the law of one price is violated, a(n) ________ opportunity arises.

Question

Quizplus · Accepted Answer

When the law of one price is violated, it means that the same asset or commodity is priced differently in different markets. This creates an opportunity for arbitrage, where traders can buy the asset in the cheaper market and sell it in the more expensive market to make a profit. Hedging is a strategy to reduce risk, speculation involves taking on risk for potential profit, and power play is not a relevant term in this context.

When the Law of One Price Is Violated, A(n) ________