Suppose someone offers you the  bet: pay $7 and flip a coin. If the coin comes up heads, he pays you $10, and if the coin comes up tails, he pays you $5. In turn, you come up with the idea of offering someone else a coin toss in which they pay you $7 and toss another coin. You tell him that if it comes up heads, you will pay him $9, and if it comes up tails, you will pay him $5. You think you see an opportunity to make an arbitrage profit by participating in both transactions at the same time. 

Why isn't this an arbitrage opportunity? 

How could you make it one assuming you could get two people to participate in these bets?

Answer rating: 100% (QA)

This scenario does not present an arbitrage opportunity because the expected value of both bets is t... View the full answer