Tuesday 24 February 2009

Time travel and foreign exchange

I had some random thoughts in our finance class today. All the fin gods are requested not to kill me after they read this. Remember the Grandfather Paradox in time travel? You go back to the future and kill your grandfather before your father is born. What will happen? This is an argument against time travel.

I thought up of another, actually what I came up with proves that you can't use time travel to your exact benefit (for e.g., know the outcome of a match so that you can bet on it). The limitation of my theory is that it cannot explain the example I just gave, but as I said, some random thoughts.

Theory: In hedging, you consider the futures rate of a currency and decide whether or not to hedge. So I take a time machine, go to the future, find out the spot rate and take a position accordingly. Now I think I have benefitted. But the very act of me taking that particular position has affected the futures price of the currency, thus effectively negating the gains.

This theory proves that to gas around, you can even know absolute bullshit and seem knowledgeable (probably this is one reason for the present economic crisis, too many people like me out there :P). Tell me if the theory made any sense to you, I am not sure it did to me!

4 comments:

Dutta said...

typical Chaitanya Bhaiya ..!

Mudunuru Jagannadha Aditya said...

Ekkuvga Alochncha ku,

Hope you have seen Aditya369 & Love Story 2050 many times

Raga said...

ok mukka artham aithe vottu..

ADITYA said...

Interesting Logic.. Need to think about it..