arbitrage
A) arises when subsidiary profits vary due to local regulations
B) occurs when firms move funds to lower tax jurisdictions
C) arises when barriers to trade exist
D) occurs due to the incidence of capital flight

Question

Quizplus · Accepted Answer

Arbitrage occurs when firms take advantage of the differences in prices or costs of certain goods or financial assets in different markets to make a profit. Moving funds to a lower tax jurisdiction is a common form of arbitrage. The other options (A, C, and D) do not accurately describe the concept of arbitrage.