Group-stage contracts summing to more than two
Question
In a four-team group exactly two teams qualify, and a contract on each team pays if it qualifies. The prices are , , and . With zero interest, and the freedom to buy or sell contracts and bonds paying , what up-front credit does an arbitrage provide?
Short answer
. The four contracts together always pay , but they are priced at . Sell one of each and buy two bonds, taking in now with a payoff that nets to zero.
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