Is it worth it for LTCM to act as arbitrageurs to trade against small mispricing of 1%?

(1) It depends. It may be worth it if such mispricing tends to always reappear in the financial markets. In other words, if a 1% price mistake repeatedly appear multiple times, the small mispricing can compound into bigger ones.

(2) It is definitely not worth it as 1% in 30 years is too small and not efficient for investors to spend resources correcting it. Such resources can be used in other places to benefit the economy.

(3) It is not worth it because stock price does not need to always reflect the true fundamentals. Stock market is a market for speculation. Whether price is right or wrong on a day-to-day basis will not affect how CEOs manage their own firms.

4) Efficient stock price is important as it helps society to allocate capital to different companies in the most efficient way, which in the end benefits everyone.

	(2) AND (3)
		(1) and (4)
		(3)
		(2)