Principle of Arbitrage

Could someone please provide a clear picture of how the artbitrage works with complex examples using an asset, a dervatie and a risk free bond?

Or in the alternate provide a link to learn the same?


& Thanks.

This is really more a Level II topic than Level I, but if you’re really interested, here’s an article I wrote on pricing currency forwards:

It covers the arbitrage transactions that are available if the forward is mispriced.

If you want something more complex, here’s one on pricing FRAs:

The arbitrage transactions there are surprisingly complicated.