You are correct. I was thinking the kind of arbitrage where people are offering a futures contract at a different price than the current price of the good (modulo the risk-free rate, storage costs and consumption of the good). Then they will be arbitraged and lose money for no good reason.
I was thinking the kind of arbitrage where people are offering a futures contract at a different price than the current price of the good (modulo the risk-free rate, storage costs and consumption of the good). Then they will be arbitraged and lose money for no good reason.
Investors know not to do this, but it’s rarely immediately obvious to people who start learning how to invest.
Financial arbitrage is nothing but this, essentially...
No, it’s really not. The entire point of arbitrage is multiple agents are involved.
You are correct. I was thinking the kind of arbitrage where people are offering a futures contract at a different price than the current price of the good (modulo the risk-free rate, storage costs and consumption of the good). Then they will be arbitraged and lose money for no good reason.
Exploitation of money pumps can be considered arbitrage but not all arbitrage is the exploitation of money pumps of this kind.
Can you provide a stronger case for this?
I was thinking the kind of arbitrage where people are offering a futures contract at a different price than the current price of the good (modulo the risk-free rate, storage costs and consumption of the good). Then they will be arbitraged and lose money for no good reason.
Investors know not to do this, but it’s rarely immediately obvious to people who start learning how to invest.