If markets are inefficient, then why have traders not been able to exploit the wealth of arbitrage

Fantastic news! We've Found the answer you've been seeking!

Question:

If markets are inefficient, then why have traders not been able to exploit the wealth of arbitrage opportunities that should be out there?If markets are efficient, then what reason would traders have to trade at all if price movements were simply random?

Posted Date: May 15, 2024 01:30 PM

See More Questions

Case 2 Consumers Take a Shine to Apple, Inc.* Synopsis: Few companies have been able to master the arts of product innovation, a "cool" brand image, and customer evangelism like Apple. After nearly...
Introduction In 2010, New United Motor Manufacturing, Inc., a unique and highly successful joint venture between Americas General Motors and Japans Toyota, went out of business. NUMMI, as the...
Jan Flenderson, marketing manager at Awesome Bits Games (ABG), was starting to get worried. The Kickstarter crowdfunding campaign for the latest company board game, Undead Rising, had gone live at 3...
The Hartley Hotel Corporation is planning a major expansion. Hartley is financed 100 percent with equity and intends to maintain this capital structure after the expansion. Hartleys beta is 0.9. The...
Thirty-five stock analysts were asked to estimate earnings per share for Intel Corporation for the upcoming fiscal year. A summary of survey results is given below Assume the 1st quartile is $1.10...
The N?point DFT of a random sequence x(n) is Assume that E{x(n)} = 0 and E[x(n)x(n + m)] = ? 2 x ?(m) [i.e., x(n) is a white noise process]. (a) Determine the variance of X(k). (b) Determine the...
AB Company utilizes a standard cost system. The following static budget has been developed for Department $\mathrm{X}$ for April, when expected production is 4,000 units. Analysis has shown that of...
Management is considering the purchase of a new machine for a cost of $12,000. It is estimated that the machine will generate positive net cash flows of $3,000 per year for five years and will have a...
Convert hybrid parameters to S-parameters and vice versa. Convert admittance parameters to S-parameters and vice versa.
How to create/design a diode logic circuit (Y) and resistor BJT transistor circuit (Z) given the boolean expressions Y = (B+C)*(A*B) and Z = C*(A+B)'.
1. A pipelined processor has 10 stages and Ins cycle time. A single-cycle processor has 8ns cycle time. a) [5pts] What is the speedup of the pipelined processor over the single-cycle processor when...
Discuss the concept of Expected Rate of Return. Think about the expected rate of return in terms of stocks and discuss stand-alone risk, market conditions. What is the probability of each of these...
Analyze the role of advanced stakeholder engagement strategies, such as participatory GIS (PGIS) and community-based planning approaches, in fostering inclusive decision-making processes and...
Calculate the excess return (relative to the risk-free rate) of a stock during a period in which the stock price went from $106.17 to $276.64 and inflaton was 4.10%. Assume no dividend payments
What factors does a financial manager need to consider when determining a suitable level of working capital for a corporation? Explain why you consider your chosen factors are important. Why is the...
77. Pedro can finish painting a wall in 6 hours. Juan can finish painting the same in wall in 3 hours. How long will it take them to finish painting the wall 78. The expression x -8x +16 can be...
During registration at Tech every quarter, students in the Department of Management must have their courses approved by the departmental advisor. It takes the advisor an average of 4 minutes...
Describe and contrast stand-alone automation and flexible-manufacturing-system automation.
Which type of business model does Fezzari use?
Describe a manufacturing cell and contrast a cell to the equipment arrangement in a traditional manufacturing operation.

If markets are inefficient, then why have traders not been able to exploit the wealth of arbitrage

Question:

Expert Answer:

The concepts of market efficiency and the ability of traders to exploit arbitrage opportunities are complex and subject to ongoing debate in the field of finance Lets address each question separately ... View the full answer

Students also viewed these finance questions