"I may order merger arbitrage for dessert but I don't want it for my meal," insists one pension-fund manager.
China's capital flow is characterized by its bidirectionalness, periodicity, riskless arbitrage and imbalance.
This must mean that no one can arbitrage because no one can borrow uncollateralised, no one has spare collateral, and no one is willing to lend –arbitrage involves both borrowing and lending.
Alternatively, Benjamin Bowler of Merrill Lynch suggests investing in hedge-fund niches, such as merger arbitrage.
Topics include: portfolio theory; equilibrium models of security prices( including the capital asset pricing model and the arbitrage pricing theory); the empirical behavior of security prices; market efficiency; performance evaluation; and behavioral finance.
Although it gets hated emotionally, arbitrage is an economic opportunity in nature as well as logic of market economy to bring about such inevitable behavior.
narrow margin arbitrage
Although Mr Lepori dryly labels this phenomenon the "reversal effect", others might view it as an opportunity for arbitrage.
"arbitrage pricing theory - APT: An economic theory that determines prices of assets and the associated risk premia for each kind of pervasive risk assets face, on the assumption that the expected return of an arbitrage portfolio is zero."
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