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What exactly are the “bounds” in arbitrage bounds?

What exactly are the “bounds” in arbitrage bounds? The bounds refer to price levels for the combination of related tradable instruments (spreads) outside which arbitrage activity switches from ...
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What exactly are the “bounds” in arbitrage bounds?

Bound is the limit within which arbitrage opportunity opens up. If the charges are frictions are more the bound is larger and chances of arbitrage are more. So ideally the charges if kept well (read ...
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Are risk-free-rate bonds and cash fungible?

First of all your statement is not quite correct. If you receive cash as collateral, you have to pay me interest at whatever rate we have agreed to (probably Fed Funds). If you receive bonds as ...
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