Annotated Bibliography On Arbitrage
Annotated Bibliography
Allana Dorsett
BUSI 303-002
Liberty University
Arbitrage is a profit producing practice that operates by acquiring an entity at a low price, and then selling it once the price increases.
Akram, F.Q., Rime, D., & Sarno, L. (2008). Arbitrage in the foreign exchange market: Turning on the microscope. Journal of International Economics 76(2). 237-53. http://dx.doi.org/10.1016/j.jinteco.2008.07.004
The focus of this source is to explain the inevitability of arbitrage in the FX market. This source provides an effective overview of the realities of arbitrage, including an in depth description of arbitrage’s propensity to have a deceptive presence in the FX market. The article, written for an audience already …show more content…
Shleifer and Vishny explain that although arbitrage is an effective and intelligent strategy, it does have notable flaws that must be kept in consideration. This article is useful because it closely examines the practice of arbitrage and how it can fail the FX market, which is something businessmen might not understand when beginning to trade at the global level. This source is about twenty years old, which is typically older than most scholars care to look for, however, I feel that it brings a unique perspective to any discussion and, therefore should be utilized. This article was written for financial researchers and those involved in the financial sectors of businesses. The authors of this article, similar to the other authors mentioned above, also used sources from esteemed business journals (i.e. Journal of Finance, Journal of Economic Theory, etc). Due to this article’s extremely reliable sources, I would say that this too is a reliable source. Both of the authors for this article are economics professors at top schools: Harvard University and the University of Chicago. The authors conclude that those participating in arbitrage should not engage in highly risky trades due to their “volatility.” They also explain, in detail, their unique method for dealing with arbitrage trades that invest capital. At first I had a difficult time understanding how this process would work, especially how aiming for less “volatile” trades would be the best decision. After giving it more consideration, I realized that while aiming for smaller trades, a person can invest less money while reaping smaller benefits over a long period of time, which will eventually accumulate into a large total earning. However, if a person attempts to get involved with larger and riskier trades, they make more money pe deal, but lose a greater amount in total, thus their profit is usually significantly smaller than someone who
Allana Dorsett
BUSI 303-002
Liberty University
Arbitrage is a profit producing practice that operates by acquiring an entity at a low price, and then selling it once the price increases.
Akram, F.Q., Rime, D., & Sarno, L. (2008). Arbitrage in the foreign exchange market: Turning on the microscope. Journal of International Economics 76(2). 237-53. http://dx.doi.org/10.1016/j.jinteco.2008.07.004
The focus of this source is to explain the inevitability of arbitrage in the FX market. This source provides an effective overview of the realities of arbitrage, including an in depth description of arbitrage’s propensity to have a deceptive presence in the FX market. The article, written for an audience already …show more content…
Shleifer and Vishny explain that although arbitrage is an effective and intelligent strategy, it does have notable flaws that must be kept in consideration. This article is useful because it closely examines the practice of arbitrage and how it can fail the FX market, which is something businessmen might not understand when beginning to trade at the global level. This source is about twenty years old, which is typically older than most scholars care to look for, however, I feel that it brings a unique perspective to any discussion and, therefore should be utilized. This article was written for financial researchers and those involved in the financial sectors of businesses. The authors of this article, similar to the other authors mentioned above, also used sources from esteemed business journals (i.e. Journal of Finance, Journal of Economic Theory, etc). Due to this article’s extremely reliable sources, I would say that this too is a reliable source. Both of the authors for this article are economics professors at top schools: Harvard University and the University of Chicago. The authors conclude that those participating in arbitrage should not engage in highly risky trades due to their “volatility.” They also explain, in detail, their unique method for dealing with arbitrage trades that invest capital. At first I had a difficult time understanding how this process would work, especially how aiming for less “volatile” trades would be the best decision. After giving it more consideration, I realized that while aiming for smaller trades, a person can invest less money while reaping smaller benefits over a long period of time, which will eventually accumulate into a large total earning. However, if a person attempts to get involved with larger and riskier trades, they make more money pe deal, but lose a greater amount in total, thus their profit is usually significantly smaller than someone who