# Tag Info

## Hot answers tagged arbitrage

22

It's not clear what level of answer you're looking for, so here is a much more basic answer. There are indeed many exchanges with many different prices. However, if you have noticed that you could make money by exchanging your BTC for USD, exchanging the USD for SEK, and then exchanging the SEK for slightly more BTC than you started with - then someone else ...

15

There is a good Planet Money episode on ticket scalping; I recommend it. The reason for banning ticket scalping has nothing to do with economic harm, and everything to do with making the arts (or sports, whatever) accessible to people of more-modest means. Consider the fact that artists could, if they wanted, just auction off all the seats to their shows, ...

8

Economic analysis always requires making some assumptions at some point. The assumptions that you make should try to fit reality the best that they can. Regarding your specific situation, there is a term in economics that might be helpful in describing what's going on: "Market Segmentation." This is a topic that is often studied in the asset ...

6

Nobody has to loose in an arbitrage. Economic relationships are not necessarily zero-sum (in fact often they will not be zero-sum). For example, if apples in city A are sold for ${\\\$}5$and apples in city B can be sold for${\\\$}8$, and we assume zero transaction cost there will be an arbitrage opportunity to earn ${\\\$}3$riskless profit per apple by ... 6 ...no-arbitrage models (such as Black-Scholes and HJM) are equivalent to equilibrium models (such as CAPM or C-CAPM). Short Answer Yes, for models where asset prices are assumed to be Ito semimartingales (where the martingale part is a Brownian integral), although a more general argument is needed than that suggested by the special cases typically ... 5 Equilibria: in the macroeconomic sense of aggregate equilibrium where all markets clear, markets are most likely never in any equilibrium but rather in constant flux between different equilibria, because the market clearing macroeconomic equilibrium always depends on real and also in short run nominal factors which constantly change. Hence it does not make ... 5 The no-arbitrage condition simply states that the (rental) price of the machine should equal it's net cost. So, there are no profits, i.e. I am indifferent between renting or not. If the price is below or above the cost then there is still arbitrage (money on the table). Due to the definition of$q$, we want the rental cost per period (i.e. in each year). So,... 4 It's important to distinguish between the effects of arbitrage on: a) the direct parties to arbitrage transactions; b) other agents in the markets in which the arbitrage takes place. Suppose arbitrageurs buy a good in market A in which its price is \$1 and sell in market B where its price is \$2. Assume further that in each market those prices have freely ... 3 Given no arbitrage, the price of the machine of vintage$\tau$should be$q_{k t}(\tau)=p_{k t}(\tau)-\frac{p_{k t+1}(\tau)}{1+r_{t+1}}$... "No arbitrage" is a bit of a misnomer here. In this sentence, it really means "zero profit". The rental price must be equal to the price of owning a machine for one period. For example, if$$q_{k t}(... 3 I believe there is not a unique price. Say, instead of buying the option you spent 0.5 on a half a unit of the asset$S^2_1$This asset pays out$[0.4, 0.6, 0.8]$which first order stochastically dominates the option. So, no matter your probability beliefs about the states, in that setting you'd never pay$0.5$for the option which pays less in every state.... 2 Used to be capital controls. You could only buy dollars (or any other foreign currency) through official channels at the official favorable rates by providing documentation displaying need for said currency (e.g. Travel or import documents). 2 There is nothing wrong with your idea. Some people may say that it would reduce liquidity - but there is way more than enough liquidity in the system already. HFT is just parasitical - it serves no useful purpose. A small transaction tax would have a similar effect. 2 I'm going to look more generalized at the producer's side of things. Either the producer wants to use price discrimination to maximize his own profits. In that case, earlier tickets may be cheaper, and later bought tickets are more expensive. Then, all tickets scalpers do is reap the producer surplus. It would be similar to a student buying items at student ... 2 It is my impression that the fact that "scalping tickets" is considered illegal (or at least restricted) in many parts of the world, may be due to the following reasons: A) Transactional: A ticket has a consumer price printed on it. This means that the supplier of the service has announced/committed to a price at which he is willing to provide the service/... 1 A quote would be on an exchange, and currency involved is whatever is specified on the exchange. There may be multiple exchanges - with different prices. (Price deviations between markets for financial assets are normally small, but that depends on the exchanges being liquid.) Data providers translate those quotes to other currencies based on the appropriate ... 1 With illiquid stocks, the B/A spreads for the options are Holland tunnel wide. For some it's maybe 50 cents, for others, over$4. With such a wide range of price, where is the actual market? What's fair value on which to base an IV calculation? Most likely, the broker is basing IV on the midpoint. However, the midpoint isn't an accurate representation of ...

1

In simple terms, an acquisition usually happens when a successful (read: low-risk) company purchases an unsuccessful (read: high-risk) company. It can be viewed as a transference of risk from the acquiree to the acquirer, and all things being equal, the market demands higher returns from riskier assets. In the short-term this is effected through the price, ...

1

The argument to have both share values converging is based on the fact that when the subsidiary redistributes the shares to the parent is similar to "unspining off". The spin-off subsidiary is effectively being re-owned by the parent, becoming a part (a share) of the parent. As such, owning shares of the subsidiary becomes a proxy of owning shares of the ...

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