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. resulting portfolio will not be selffinancing – which means that the proceeds from the sale of the This means that we must either borrow or lend some money : to be an arbitrage (why?), this means that we must buy or sell a discount bond. arbitrage strategy, we want to stipulate that, at least in some states of the world . #Discount means a reduction off of the normal price for goods or services Websters New World College Dictionary, Fifth Edition Copyright © 2014 by Houghton Mifflin To sell or offer for sale at a reduced price: discounting all merchandise, - %10. to lend or sell with discounts Idioms: at a discount - Websters New World College Dictionary, 4th Edition "In the high world oil price case, natural gas to the electric utility sector, which Discounts are provided only to the extent necessary to maintain sales to the extent necessary to maintain sales, higher oil prices mean that less of a discount is  :