Arbitrage profits are generally defined to exist in situations where there are positive returns to be made from investments that have:

Question

Quizplus · Accepted Answer

If there are two assets (or portfolios of assets)that are identical in all but price,then it may be possible to buy the asset (or portfolio of assets)with the lower price and fund the purchase by short selling the higher-priced asset (or portfolio of assets).This approach generates a return without either risk or initial investment but,as might be expected,arbitrage opportunities are difficult to identify.

Arbitrage Profits Are Generally Defined to Exist in Situations Where