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It is interesting to explore the risk return characteristics for risk arbitrage on stock swap offers with collars.
When the economics of settlement is considered, however, the defendant may partially avoid the amount of liability that a court would set through risk arbitrage, even when his wrongdoing has been discovered and an action is prosecuted.
While emerging markets present attractive opportunities in terms of risk arbitrage, says Will Rhode, a research analyst at TABB and author of the new report, investment hazards loom: exposure to turbulent currencies; discriminatory tax and capital controls; cumbersome and expensive local red tape for local securities trading; unreliable technical and telecommunication infrastructure; and immature clearing and settlement systems.
Characteristics of risk in risk arbitrage. Journal of Finance 56, no.
Another paper that uses an ABS approach is by Mitchell and Pulvino [85], who analyze almost 5000 mergers from 1963 to 1998 to characterize the risk and return in risk arbitrage. Results indicate that risk arbitrage returns have zero correlation with the market during up-market conditions, but large positive correlation during down-market conditions.
Exploiting this inefficiency is known as risk arbitrage.
Second, issuing bonds for the purpose of investing the proceeds in pension fund assets is a classic example of risk arbitrage: "the simultaneous purchase and sale of assets that are potentially but not necessarily equivalent." In this case, the bonds (perceived by buyers as low-risk securities) are sold and the proceeds invested in riskier--and presumably higher yielding--securities.
Risk Arbitrage: An Investor's Guide (New York: John Wiley and Sons, 1999.
The risk arbitrage approach involves the same analysis as the cost cap to determine the PML.
The web site, which soon will feature an afternoon update on risk arbitrage, is integral to the Daily Deal package, but print is at the core because the target audience includes many commuters, print is portable and the paper-Web combination is formidable.
Baker's and Nye's New York-based risk arbitrage firm, Baker, Nye Advisors, will also lend administrative assistance to Bond, Procope.
A great growth industry on Wall Street has been risk arbitrage, where people bet on the rise, or fall, of stock prices.

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