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I am stuck on this question, if someone could please summarize and answer it you will be a life saver. While discussing arbitrage and the
I am stuck on this question, if someone could please summarize and answer it you will be a life saver.
While discussing arbitrage and the no-arbitrage pricing model, we learned that trading financial securities does not create wealth. Yet, we can observe that there are professional day traders as well as high frequency trading firms and actively managed investment funds. If trading on its own does not create wealth, how do these market participants earn a profit? Is it possible that some trading does create wealth?
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