Even financially constrained professional arbitrageurs
may be able to exploit asset mispricing if they can link up with rational but uninformed investors.
In the Shleifer-Vishny model, arbitrageurs
(the agents) have access to funds mainly from outside investors (the principals), who will generally gauge the ability of arbitrageurs
--and hence decide on the amount of funds to allocate to them--based on their past performance.
It is not an arbitrageur
or short-term investor primarily interested in turning an immediate profit.
For example, if arbitrageurs
are subject to capital constraints and they cannot raise the capital necessary to form the riskless hedge, they will be unable to undertake trades that would move the market toward an efficient state (Shleifer and Vishny 1997).
One would think Revco would try to get a tender offer out there as soon as possible and finish this deal," says one arbitrageur
Even though the arbitrageurs
are trading gold, their transactions have little or no direct effect on the price of gold, the quantity of money, or the bond interest rate.
This is because when a merger is announced, the stock gravitates to the hands of arbitrageurs
and other short-term holders.
Legally speaking, Drexel Burn ham's victims were mainly its fellow Wall Street hellspawn-takeover artists and arbitrageurs
If mispricing occurs, arbitrageurs
will step into profit from the opportunity and bring prices back into line.
By keeping a very close eye on different markets arbitrageurs
are able to profit from small price discrepancies.
James Ling and Charles Bluhdorn are characterized primarily as arbitrageurs
with no coherent plan for their respective corporations.
Orc and E2E will focus on delivering solutions to advanced options traders, arbitrageurs
and market makers.
A range of market players, including commercial institutions, funds, arbitrageurs
, HNWIs, proprietary traders and private investors are Members of DGCX.
With debt so cheap and equity remaining expensive, companies could have an incentive to play arbitrageurs
and issue debt to buy back their own shares.
They are very rarely misaligned but since they are separate and independently listed products, the arbitrageurs
are keeping the prices balanced," said Shalabi.