Modified Floyd-Warshall algorithm for risk arbitrage

  • Authors:

  • Ch. Mouratidis;G. Majchrowska;D. Zissopoulos;N. Asimopoulos

  • Affiliations:

  • TEI of Western Macedonia, Department of Business and Administration, Kozanis, Greece;TEI of Western Macedonia, Department of Information Technology, Applications in Administration and Economy, Grevena, Greece;TEI of Western Macedonia, Department of Business and Administration, Kozanis, Greece;TEI of Western Macedonia, Department of Business and Administration, Kozanis, Greece

  • Venue:
  • ICS'10 Proceedings of the 14th WSEAS international conference on Systems: part of the 14th WSEAS CSCC multiconference - Volume I
  • Year:
  • 2010

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Abstract

Traditionally risk arbitrage is the simultaneous purchase of stock in a company being acquired and the sale of stock of the acquirer. Modern risk arbitrage focuses on capturing the spreads between the market value of an announced takeover target and the eventual price at which the acquirer will buy the target's shares. Here we look at the concept of arbitrage, how market makers utilize "true arbitrage," and, finally, how retail investors can take advantage of arbitrage opportunities.