O'Reilly logo

Understanding Arbitrage: An Intuitive Approach to Financial Analysis by Randall Billingsley

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Chapter 1. Arbitrage, Hedging, and the Law of One Price

...[Arbs] keep the markets honest. They bring perfection to imperfect markets as their hunger for free lunches prompts them to bid away the discrepancies that attract them to the lunch counter. In the process, they make certain that prices for the same assets in different markets will be identical.

—Peter L. Bernstein1

“Buy low, sell high.” “A fool and his money are soon parted.” “Greed is good.” All these adages illustrate the profit-oriented impulses of Wall Street traders, who stand ready to buy and sell. In pursuit of profits, undervalued assets are bought, and overvalued ones are sold. While risk is routinely borne in trading assets, most investors prefer to exploit mispriced assets ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required