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Arbitrage 101
K Brown
02nd september 2009
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Explain how the cost of trading limits full market efficiency and how it relates to the restriction of short selling.
High trading costs create and perpetuate mispricing. Restrictions placed on short selling limits efficiency by creating a market full of buyers with few, if any investors able to sell short.
Arbitrageurs seek to find mispricings between securities that allow them to buy the undervalued security while selling the overvalued security, creating an efficient market free of mispricings.
Comments: 03
Security Price & You
A Danubio
1st august 2009
Security prices reflect ALL market information ever available about price, volume, and trading behavior. This makes technical analysis worthless.Markets immediately react to PUBLIC information, making fundamental and technical analysis of no use. Markets immediately react to PUBLIC AND PRIVATE (insider) information, making insider trading ineffective as well as fundamental and technical analysis.
Comments: 03
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