4 Criteria for Evaluating Arbitrage Situations

by Warren Buffett
To evaluate arbitrage situations you must answer four questions:
(1) How likely is it that the promised event will indeed occur?
(2) How long will your money be tied up?
(3) What chance is there that something still better will transpire -- a competing takeover bid, for example?
(4) What will happen if the event does not take place because of anti-trust action, financing glitches, etc?
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