Exchange traded horserace betting fund with deterministic payoff – a mathematical analysis of a profitable deterministic horserace betting model
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The horserace betting market is a subset of the financial market space, and wagering typically inherits a defined return – to – risk trade-off. For horserace betting input into institutional portfolio to be plausible, the payoff – to – risk trade-off from betting must be acceptable for the fund when compared with the return – risk trade-off from the existing mainstream assets included in portfolio investment. A new paradigm for horserace betting modelling and investing is acclaimed in this thesis, as premiss for betting input into institutional portfolio. An exchange traded betting fund is developed in the thesis that is able to generate pre-race (and within-race) investment arbitrage that offers an acceptable, defined return – risk trade-off for the risk averse investor. The extensive former horserace betting market stochastic modelling theory that forecasts racer expected outcomes and payoff, is today succeeded by this research that develops a deterministic horserace betting model (and algorithm) that generates defined payoff for the fund. This deterministic betting model challenges the existing semi-strong efficient market hypothesis toward horserace betting that no betting strategy consistently outperforms the financial market’s benchmark return. Subsequently, the primary research (alternative) hypothesis tested is H_a: profitable exchange traded horserace betting fund with deterministic payoff exists for acceptable institutional portfolio investment.
Master of Philosophy (MPhil)
Griffith School of Environment
Stochastic modelling theory