Sentences with phrase «because arbitrageurs»
Do you mean risk in the sense that when you buy and sell mutual funds, you get the exact NAV price calculated at the end of the day; when you buy and sell ETFs you have a free market price that while it's unlikely to diverge much from the underlying NAV because arbitrageurs gonna arbitrage, it theoretically could?
https://money.stackexchange.com/ Not exact matches
Yes, index arbitrageurs were flat out selling stock in 1987, but only because of the monumental selling of S&P 500 futures.
That imaginary situation can not occur, because in the real world, «value arbitrageurs» always step in to restore market efficiency.
ETFs do not vary much from the underlying NAV because when they do arbitrageurs step in to redeem or create ETF units, a feature not available with CEFs.
But the institutions had sold massive amounts of futures, and the index itself didn't fall nearly as far because the terrified arbitrageurs wouldn't exploit the spread.
«We recognize this doesn't completely solve the problem for arbitrageurs because there is the fiat currency side of arbitrage.