Arbitrage means taking advantage of temporary differences in market prices to make a profit. Assume two real
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Arbitrage means taking advantage of temporary differences in market prices to make a profit. Assume two real estate companies, A and B, both operate in the New York area and focus on office properties. You have determined that Company A's shares have an intrinsic value of $20 per share but are trading at $22 per share, while Company B's shares are worth $25 per share but are trading at $22 per share.
What would a rational investor (or arbitrageur) do to take advantage of this price difference (no short-selling constraint and transaction fee)?
Related Book For
Financial Statement Analysis
ISBN: 978-0078110962
11th edition
Authors: K. R. Subramanyam, John Wild
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