No arbitrage is equivalent to the idea that all risk-free investments should offer investors ________.
A) zero return
B) the same return
C) positive returns
D) negative returns

Question

Quizplus · Accepted Answer

The principle of no arbitrage in finance suggests that identical risk-free investments should yield the same return. This is because if different risk-free investments offered different returns, investors would exploit these differences to make risk-free profits, which is not sustainable in an efficient market.

No Arbitrage Is Equivalent to the Idea That All Risk-Free