Virtual Organization Finance Paper
Select a Virtual Organization using the student website. Assume your organization is privately held, wants to expand operations, and is faced with three options for expansion:
• Going public through an IPO
• Acquiring another organization in the same industry
• Merging with another organization
Prepare a 1,050- to 1,400-word paper in which you compare and contrast options and make a recommendation about which strategy the organization must choose.
• Strengths of …show more content…
An arbitrage profit is the simultaneous purchase and sale of an asset in the order to profit from the difference in the asset price. The trade of profits exploiting the price differences of identical or similar financial instruments, different markets or different forms. Arbitrage is in an existence from the result of the markets inefficiencies. Arbitrage provides a mechanism to ensure prices which does not deviate substantially from the fair value for long lengths of time (Investopedia, 2011).
Investopedia. (2011). Retrieved from http://www.investopedia.com
22 – 4 What are the markets and mechanics involved in generating (a) simple arbitrage profits, and (b) triangular arbitrage profits?
Simple arbitrage deals with the ability or opportunity to purchase an asset at a relatively low price, then immediately sell it on a different market for a higher price than you paid. In simple arbitrage, only two pairs of assets (i.e. currency, stock, or commodities) are involved. Simple arbitrage works best in a market that is balanced. When talking about triangular arbitrage, a third asset comes into play. In triangular arbitrage, one form of currency is converted to another form. That converted currency is then converted into a third currency form. The third currency form is finally converted back to the original currency form. All of these conversions are occurring in a relatively short period of time in