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Basic Question 2 of 7

The no-arbitrage principle states that ______

I. arbitrage profits must exist in a well-functioning market.
II. arbitrage opportunities present themselves regularly.
III. arbitrage profits cannot exist.

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Craig Baugh

Craig Baugh

Learning Outcome Statements

explain how the concepts of arbitrage and replication are used in pricing derivatives

CFA® 2025 Level I Curriculum, Volume 5, Module 4.