Therefore, a speculator or an arbitrager
in the foreign exchange market cannot use exchange rates other than the one we are concerned with and other publicly available information to predict future values of an exchange rate.
As a would-be theorist, however, he was rarely if ever a true originator, but instead an arbitrager
For example, if our arbitrager
sees that a three-month Treasury note yield is "too low" compared with the yield on a 10-year Treasury bond, the trader will keep buying 10-year bonds (lowering the yield on the bond) and selling three-month notes (raising the yield on the note) until it is no longer profitable to do this trade.
The problem here is that he was an arbitrager
and a derivatives trader whose expertise in the market was such that none of his superiors had a clue what he was doing.
66) For instance, an arbitrager
might take advantage of price differentials between markets by buying a stock for a lower price in one market and selling it for the higher price in the other.
Pulling my wallet from my pocket, I slapped down two twenties, motioned to a smiling Trudi my thanks for her excellent service, and accelerated to as fast a broken-field dash around the assembled locals as could be expected of a forty-two year-old arbitrager
who routinely grew short of breath hailing a cab.
For instance, the exploitation of arbitrage opportunities may require the presence of a professional arbitrager
or the provision of specific information.
would operate by working as an insurance company and entering into an agreement with an individual to insure the high-cost disease.
He continues, "We are if you will and arbitrager
who deals purely in the equities of real estate; REITS' market, IPD swap derivatives and we are also now plugging
The buyer in this scenario is a type of risk arbitrager
who offers the seller the difference between what the risk costs the blogger and what it costs the specialist, who is in a better position to diversify risk.
Consider Larry the Liquidator, the shameless arbitrager
at the center of Jerry Lerner's 1989 play, Other People's Money.
Unless the arbitrager
has an infinite horizon and is never forced to liquidate, an arbitrager
who buys a closed-end fund at a discount to net asset value while selling short its underlying portfolio (even if feasible and costless) will likely not have an effective arbitrage opportunity.