In the simple model of financial asset model arbitrage, we assume that:
A) future markets are perfectly efficient.
B) there is no uncertainty about stock prices.
C) stock prices follow a random walk.
D) the risk premium does not equal zero.
E) capital gains are zero.

Question

Quizplus · Accepted Answer

In a simple model of financial asset arbitrage, it is often assumed that there is no uncertainty about stock prices, meaning they are predictable and can be arbitraged for profit.

In the Simple Model of Financial Asset Model Arbitrage, We