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Originally Posted by Archaea
I have some clients who claim to be experts in the field, and I just do the documents for certain organizational matters. But it bugs me I can't figure out what they're doing.
Can you at least explain some of the theories.
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Stock X is being bought out at $40 a share. However it is currently trading at $39.50. An abitrager will step in and buy the stock at $39.50. He will have to factor in how long before the deal closes and the interest he could have made on the $39.50 vs the .50 gain.
It can get a lot more complicated when you have supposed imbalances in currencies, interest rates, futures , etc.