Skip to main content

HOW TO BET?

 

       Say, two teams, A and B is clashing in the finals of a cricket-international cup.  Betting is going on, of course illegally.  How to bet wisely and not to lose any money?  There is a way.

      Tom strongly thinks that 'A' is going to win.  You bet with Tom on the basis; If 'A' team wins, you will pay Tom 2 dollars. If 'B' wins, Tom will pay you 3 dollars.".  Tom will be happy and accept the bet.

      Bob thinks only 'B' team has winning chance.  Hence you bet with Bob on opposite terms.  That is, if 'B' wins, bob gets 2 dollars from you, otherwise you get 3 dollars from him.

      Whatever may be the outcome of the match, you will always win.  In the victory of A or B, you will get 3 dollars from Tom or Bob and you pay out 2 dollars to one of them.  Hence, you will gain one dollar whatever may be the result of the match.

      This is called "Hedging". It is used by the investment fund managers.  The fund is called "Hedge fund".

    A  Simplified explanation is given above.  Hedging is used in the equity market and involves complex investments.  It is done at high speed using computers.

      "Money should not be idle.  It should be invested wisely and made to work".  
                     ---------------------------------------------------

Comments

Post a Comment

Popular posts from this blog

THE EARTH, A SUPER ORGANISM

     JOIN MY COURSE: "Become a programmer in a day with python"       A man called 'love lock' (what a name) proposed a theory called Gaia theory, named after Greek Goddess.      It says, "Earth is a self-regulating organism like a human being.  The organic life in it interacts with in-organic matter and maintains atmosphere, temperature and environment".  Hence the earth is still suitable for the life to thrive.      Imagine, in a particular place, there are lot of flowers.  Some flowers are white and some are darkly coloured.  We know, white reflects light and heat while dark absorbs the same.  White flowers can thrive in hot climate.  But dark flowers requires cold climate.  The absorption and reflection balances and the environment reaches average, warm temperature at which both the flowers can co-exist.  This is the essence of "Gaia" theory.      On our earth, ...
3 comments
Read more

THE PARABOLA

          A jet of water shooting from a hose pipe will follow a parabolic path.  What is the so special about parabola.    Y= x^2 Draw a graph for the above equation.  It will result in a parabola.  This parabola is also called unit parabola.  Any equation involving square will yield a parabola. Example:  Y = 2x^2 +3x+3 (also called quadratic equation)    X= 2 and -2, both  satisfies the equation 4 = X^2.  Parabolic equations always have two solutions.     Any motion taking place freely under gravity follows parabolic path. Examples:   An object dropped from a moving train,   A bomb dropped from flying plane,  A ball kicked upwards.      If a beam of light rays fall on the parabolic shaped mirror, they will be reflected and brought to focus on a point.  This fact is made use of in Dish Antenna, Telescope mirrors, etc.   ...
Post a Comment
Read more

DISORDER IS THE "ORDER OF THE DAY"

         Imagine a balloon full of air.  The air molecules are moving randomly inside the balloon.  Let us pierce the balloon with a pin.  The air rushes out.  Why should not the air molecules stay inside the balloon safely and ignore the little hole?  That is not the way the world works.  The molecules always "want to occupy as many states as possible".  Hence the air goes out in the open to occupy more volume.   The things always goes into disorder (entropy) and the disorder increases with time.  The above statement is what we call "second law of thermodynamics".      Consider a cup of coffee on the table. Suppose the heat from entire room flows to your cup of coffee, the coffee will boil and the rest of the room will freeze.  Freezing means bringing things to order and arrangement.  It violates the second law.  Hence it will never happen.  Hence heat must flow from high ...
Post a Comment
Read more