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Consider two twin stocks that are currently not trading at theoretical parity. Assuming the stocks are very liquid and there are no short-sale constraints, what

Consider two twin stocks that are currently not trading at theoretical parity. Assuming the stocks are very liquid and there are no short-sale constraints, what might prevent arbitrageurs from exploiting this mispricing?

  1. Fundamental risk.
  2. Noise-trader risk.
  3. None of the risk/costs mentioned in the other options would prevent arbitrageurs from exploiting this mispricing.
  4. Implementation costs.

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