Question

Explain the concept of arbitrage

  1. Explain the concept of arbitrage
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

ANSWER DOWN BELOW. FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.

Arbitrage means making risk free profit : by way of shorting security which is underpriced & going long on security which is overpriced.

Forwards and Futures are priced in such a way that, no-arbitrage opportunity exits to make such risk free Profits.

Whenever mispricing occurs.

Then arbitrageurs in the market take the benefit of mispricing and bring it back to its no- Arbitrage value.

Such that no- Arbitrage window exits.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Explain the concept of choice architecture What is a nudge? Explain the concept of libertarian paternalism....
Explain the concept of choice architecture What is a nudge? Explain the concept of libertarian paternalism. What is the difference between “humans” and “econs?”
Why Arbitrage Opportunities imply that the Efficient Market Hypothesis hold ? Explain...
Why Arbitrage Opportunities imply that the Efficient Market Hypothesis hold ? Explain...
Explain the concept of discount rate using the concept of opportunity costs. (Thanks. please explain what...
Explain the concept of discount rate using the concept of opportunity costs. (Thanks. please explain what the connection between these two excepts.)
Explain the concept of Sterilization?
Explain the concept of Sterilization?
Explain the concept of professionalism
Explain the concept of professionalism
explain the concept of hoemostatis
explain the concept of hoemostatis
explain how we can derive the demand curve from the consumers optimum concept explain the concept...
explain how we can derive the demand curve from the consumers optimum concept explain the concept of diminishing marginal utility in relation to the law of demand  
Explain the concept and importance of Homeostasis.
Explain the concept and importance of Homeostasis.
explain the concept of credit management
explain the concept of credit management
Explain the concept of apparent authority.
Explain the concept of apparent authority.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT