Arbitrage is ________.
A) an example of the law of one price
B) the creation of riskless profits made possible by relative mispricing among securities
C) a common opportunity in modern markets
D) an example of a risky trading strategy based on market forecasting

Question

Quizplus · Accepted Answer

Arbitrage is the practice of buying and selling securities or assets in different markets to take advantage of price discrepancies and earn riskless profits. It involves exploiting market inefficiencies to generate profit without taking on any additional risk. Therefore, the best answer is B.

Arbitrage Is ________