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The simultaneous buying and selling of securities, currencies, or commodities in different markets in order to take advantage of differing prices for the same asset.
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A simple mathematical definition of arbitrage
I am trying to formulate an understanding of arbitrage to ensure I comprehend it. There are many reference materials online, of course.
I envision a set of commodities C and a set of owners O. …
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Why would arbitrage lead to price convergence?
It is said that arbitrage leads to a convergence of price in an economy.
How certain is this to happen in real-world scenarios? … Or, is it possible to do arbitrage at a smaller scale where you can assume it won’t affect market prices? …