Limited of arbitrage Arbitrage plays a critical role in the analysis of securities markets because its effect is to bring prices to fundamental values and to keep market to efficient In practice the arbitrageurs are of capital constrained, and their effectiveness in bring prices to fundamental values is limitedLimited of arbitrage • Arbitrage plays a critical role in the analysis of securities markets, because its effect is to bring prices to fundamental values and to keep market to efficient. • In practice, the arbitrageurs are of capital constrained, and their effectiveness in bring prices to fundamental values is limited