how can we arbitrage in an efficient market?

Question

any examples? :)

Answer 1

I don't think arbitrage exists in a truly efficient market. It's one of the mechanisms outside the market that makes them efficient.

Perhaps you phrased it incorrectly and mean something else?

Answer 2

In an efficient market it is impossible to to make any arbitrage profit because the market knows everything and is priced accordingly.

Answer 3

arbitrage only exists because of inefficiencies somewhere. if you have the utopian perfect market, there could be no arbitrage. everything would be properly priced at all points, leaving no opportunity to jump in and make money on mis-priced or mis-timed events.

Answer 4

There are different types of abritrage - somederive their gains from the risk and uncerianty involved rather than efficency. Merger arbitrage spreads derive their vaule from the risk that the federal govt. will block the merger, share holders won't approve the merger etc. Whatever the reason, its predicated on the risk that the deal will fall thru, rather than classic inefficency in pricing.

Answer 5

Markets aren't efficient. Hence, one can do arb. Simple.