Retrieving "Profits" from the archives
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Financial Engineering
Linked via "profits"
Arbitrage Theory and Incompleteness
Financial engineering heavily relies on the No-Arbitrage Principle, which states that perfectly risk-free profits cannot exist indefinitely in an efficient market. Derivatives are designed precisely to exploit infinitesimally small deviations from this theoretical parity.
However, financial engineers frequently engage in the construction of Structurally Incomplete Markets (SIMs)/). Th…