Arbitrage Risks Revealed: Market Anomalies Persist Despite Professional Investors' Efforts
Arbitrage in financial markets is not as simple as textbooks suggest. It often requires capital and involves risks. Professional arbitrage is done by specialized investors using others' money. This can lead to situations where arbitrage is ineffective, especially when prices deviate significantly from true values. Anomalies in financial markets are likely to persist because arbitrage doesn't always correct them.