Which of the following statements regarding arbitrage is the most correct?
A)Any situation in which it is possible to make a profit without taking any risk is known as an arbitrage opportunity.
B)Any situation in which it is possible to make a profit without making any investment is known as an arbitrage opportunity.
C)We call a competitive market in which there are no arbitrage opportunities an arbitrage market.
D)The practice of buying and selling equivalent goods in different markets to take advantage of a price difference is known as arbitrage.

Question

Quizplus · Accepted Answer

Arbitrage refers to the practice of taking advantage of price discrepancies in different markets by buying and selling equivalent goods. Therefore, option D correctly defines this term. Option A is incorrect because arbitrage involves taking advantage of price differentials, which involves some level of risk. Option B is also incorrect because making a profit through arbitrage usually requires some investment. Option C is incorrect because an arbitrage market is one in which there are no profit opportunities resulting from price disparities, not the other way around.

Which of the Following Statements Regarding Arbitrage Is the Most