Statistical arbitrage with default and collateral

José Fajardo, Ana Lacerda

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

This paper studies the implications of the absence of statistical arbitrage opportunities in a two-period incomplete market economy where default is allowed but there are collateral requirements. Modified versions of the fundamental theorem of asset pricing are obtained.

Original languageEnglish
Pages (from-to)81-84
Number of pages4
JournalEconomics Letters
Volume108
Issue number1
DOIs
Publication statusPublished - Jul 2010

Keywords

  • Collateral
  • Default
  • Statistical arbitrage

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