Peso arbitrage, or What to do with a morning in Davao

The Philippine peso: The most profitable currency arbitrage today.

If theres a single place on earth today that Stephen Ross and Richard Roll ought to be, it must be the Philippines.

Ross and Roll, of course, are the famous financial economists who in 1980 developed the Arbitrage Pricing Theory APT of capital assets that owes its theoretical strength to one of the oldest laws of economics the law of one price.

But theres one asset class that is currently flaunting its violation of this law the...

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