To be aggressive is a reasonable strategy if institutions are acting as short-term arbitrageurs
The first problem is that we have treated arbitrageurs
as a kind of market maker whose role is to police the efficiency of prices and whose efforts will be compromised to the extent that regulatory and transaction costs make short-selling costly.
1] < V, which again captures the fact that the arbitrageur
will not bid the price all the way up to the asset's intrinsic value because of the incentives built into his compensation schedule.
Shleifer and Vishny (1997) examine the effect of intertemporal wealth constraints on the incentives of arbitrageurs
to eliminate mispricings between two securities with identical cash flows.
As a result, a sizable discount may persist over a prolonged period of time resulting in increased fundamental risk to arbitrageurs
with capital that allows them to hold positions for a long period of time can close gaps created by increases in the premium for liquidity.
In this case, for tipping to be profitable for the bidder, the increase in the back-end price induced by tipping the arbitrageurs
must be less than the private tendering costs of the marginal shareholder, weighted by a function of the bidder's toehold.
significant discount and will also mean that the arbitrageurs
will have to find
To harness the exponentially increasing amount of "young money" around, museums everywhere started up junior collectors groups so that, at the height of the '80s, the massed army of contemporary-art collectors included old-liners entranced by new art (like Jerry Elliott and Elaine Dannheisser); recently minted multimillionaires who realized, like Broad, that "it's stimulating to meet people outside the business world, who have a different way of looking at life," and soon discovered the social-status possibilities of collecting; and the young investment bankers and arbitrageurs
Armies of under-employed City advisors, lawyers, arbitrageurs
, bankers, analysts, etc, salivate over plans, advice and strategies.
routinely pour billions into the market to squeeze out a "plus.
While DGCX's current Indian Rupee product suite is essentially used by arbitrageurs
and hedgers, the new DGCX INR Quanto contract is designed for traders who take a directional call on the Indian Rupee.