Thursday, January 15, 2009

No Arb (Free Lunch) Joke

In the joke that a student tells a prof. that there is a bill on the ground and the prof replies that it is not possible is it self a joke.
If the arb opportunities are not arbitraged away by agents then such opportunity would not cease to exist. This is because when some one sees money on the street they pick than but may be not coins of lower denomination. If this does not happen than there would be “free lunches” just lying around and not being utilised.
Suminda Sirinath Salpitikorala Dharmasena

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