As discussed in the class, the case of Royal Dutch and Shell is a well-known example where the law of one price was violated. Here is a recap: Royal Dutch and Shell merged in 1907 but traded separately until 2005. Based on the terms of the merger, in principle, Royal Dutch should be worth 1.5 times Shell. However, the actual ratio of Royal dutch's value to Shell's value often deviated from 1.5 even for a substantial period of time (e.g., from 1990 to 1999). This example illustrates that arbitrageurs may be unable to restore the market efficiency when _______.
Group of answer choices
their investment horizon is relatively short
their pricing model is inaccurate and imperfect
they were not allowed to take short positions
they were outnumbered by irrational investors