Arbitrage with market risks, unlike arbitrage without market risks, involves certain convergence risks. A typical example is “risk arbitrage“, which involves buying the stock of a company subject to a takeover bid or swap offer and selling the stock of the acquiring company. However, a number of suspensive conditions could cause the deal to fail, such as the requirement for the acquiring company to obtain a minimum percentage of the target for the offer to go ahead. For these strategies, risks are systematically identified and hedged.
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2013 annual report
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