Consider two $securities,A$ & $B.$ Suppose a third security, $C,$ has the same cash flows $asA$

and $B$ combined. Given this information about $securitiesA,B,$ & $C,$ which $of$ the following

statements $is$ INCORRECT? Suppose you are $in$ a normal market. Recall: normal market $isa$

competitive market $in$ which there are $no$ arbitrage opportunities, see slide $29$

$AIf$ the total price $of$ A and $Bis$ cheaper than the price $ofC,$ then $we$ could make a profit selling

A and $B$ and buying $C.$

$B$ PriceC $=$ PriceA $+$ PriceB

$C$ Because security $Cis$ equivalent $to$ the portfolio $of$ A and $B,by$ the law $of$ one price they

must have the same price.