Realistic examples of arbitrage activities that occur in the real world are Ernst as follows:
Suppose that the exchange rates (after considering transaction costs) in London are 5 10 1000, but in Tokyo are 1000 12 6. An investor could make a 12 1000 in Tokyo and converting that 12 to Ernst 1200 in London, thus achieving a profit of 200, instant and free of risk. This type of arbitration, known as the”triangle”of arbitration is so simple that rarely happens.
Another example arbitration case between the New York Stock Exchange and the Chicago Mercantile Exchange. When the price of a share on the NYSE to its contract in the future are out of synch CME, an investor can buy cheaper and sell assets in the market where the price is higher. As asset Management differences between the prices are usually very small and do not last long, that arbitration can only do investors with enormous computational power and the possibility of making transactions faster than any other market participant. Additionally, large volumes of trading should be active for a utility attractive.