> Just a little app to model the arbitrage (gamble) opportunity.
This isn't arbitrage at all. That is taking advantage of a price difference of an asset between two markets by buying and reselling it (nearly) simultaneously. If you are holding the asset longer than strictly necessary it isn't (only) arbitrage.
Your intended action is just timing the market: buying stocks based on the belief they will soon rise in price.
How do you short "Elon Musk" stock? You can only short companies the acquirer owns, not the acquirer himself, so this does not count as "merger arbitrage" under the definition you linked.
the world of arbitrage calls this arbitrage. there are other, more pure, arbitrages - but this is very mainstream one. you are buying the stock at the market price, while you think it will be worth the offer price - there's a risk that it blows up. risk arbitrage. (not to be confused with garbitrage)
It doesn’t need to be simultaneous, just be very low risk. Usually simultaneous execution is a factor in having low risk though, but some deals take longer.
An example is Bill Gates buying DOS from SCP. The deal making wasn’t instant but he still bought it for a certain profit as he had the contract with IBM.
For those looking for the simple to understand solutions:
Bertrand’s box paradox:
The trick here is that you are not actually drawing a card, but a card side. There are 3 cards, but each card has two sides so there are 6 card sides and half of those sides are white.
So, now we have to pick one of the 3 white card sides at random. Of those 3, 2 have white on the other side and one has black. Therefore, if you pick a white side at random, there is a 2/3 chance that it is white on the other side.
Monty Hall Problem:
Say you're going to switch no matter what. Then the only way you can lose is if you pick the right door on your first try - a 1/3 chance. Conversely, as long as you pick either of two wrong doors first you win. Therefore, you have a 2/3 chance of winning if you switch vs a 1/3 chance if you stick with your original pick.
I suspect the problem isn't well stated, at least in the article. If one considers a random choosing a card, repeating until the card has a white side on it, and then putting that card a white side upwards, then probability doesn't seem to me be the one mentioned.
