The process of arbitrage: moves a financial asset along the Security Market Line. vertically shifts the...

The process of arbitrage: moves a financial asset along the Security Market Line. vertically shifts the Security Market Line. pushes all financial assets to the same average expected rate of return and risk level. raises or lowers the average expected rate of return of a financial asset with a given level of risk.

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The arbitrage causes buying at low prices at one marketing and selling at high price in another market. It causes fluctuations in the return of financial assets at a particular risk level. It happens due to the process of arbitrage w.r.t. the financial market.

Rahul Sunny answered 2 years ago

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