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4 comment(s). Last comment by Choivo Capital 2018-12-27 12:46
Posted by Ricky Yeo > 2018-12-27 06:43 | Report Abuse
If 80% probability of going through, then you have to make sure if it didn't go through, the price would not fall by 25%, otherwise, the expected value will be negative.
80% x 6.2% = 4.96%
20% x 25% = -5.00%
Posted by Ricky Yeo > 2018-12-27 06:53 | Report Abuse
But given a 6 months 'almost' risk free rate of fixed deposit is around 3.3%. The expected value in this arbitrage will need to beat that, so:
80% x 6.2% = 4.96%
20% x -8% = -1.60%
The magnitude of the fall needs to be 8% or less.
Posted by Choivo Capital > 2018-12-27 12:46 | Report Abuse
Hmm that is true.
Thanks.
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Choivo Capital
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Posted by Choivo Capital > 2018-12-26 12:16 | Report Abuse
Yeah, i hold some. Free money.