arbitrage

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Arbitrage

The simultaneous buying and selling of a security at two different prices in two different markets, resulting in profits without risk. Perfectly efficient markets present no arbitrage opportunities. Perfectly efficient markets seldom exist, but, arbitrage opportunities are often precluded because of transactions costs.

Arbitrage

An investment practice that attempts to profit from inefficiencies in price by making transactions that offset each other. For example, one may buy a security at a low price and, within a few seconds, re-sell it to a willing buyer at a higher price. Arbitrageurs can keep prices relatively stable as markets try to resist their attempts at price exploitation. Arbitrageurs often use computer programs because their transactions can be complex and occur in rapid succession.

arbitrage

The simultaneous purchase and sale of substantially identical assets in order to profit from a price difference between the two assets. As a hypothetical example, if General Electric common stock trades at $45 on the New York Stock Exchange and at $44.50 on the Philadelphia Stock Exchange, an investor could guarantee a profit by purchasing the stock on the Philadelphia Stock Exchange and simultaneously selling the same amount of stock on the NYSE. Of course, the price difference must be sufficiently great to offset commissions. Arbitrage may be employed by using various security combinations including stock and options and convertibles and stock. See also basis trading, risk arbitrage.

Arbitrage.

Arbitrage is the technique of simultaneously buying at a lower price in one market and selling at a higher price in another market to make a profit on the spread between the prices.

Although the price difference may be very small, arbitrageurs, or arbs, typically trade regularly and in huge volume, so they can make sizable profits.

But the strategy, which depends on split-second timing, can also backfire if interest rates, prices, currency exchange rates, or other factors move in ways the arbitrageurs don't anticipate.

arbitrage

the buying and selling of PRODUCTS, FINANCIAL SECURITIES or FOREIGN CURRENCIES between two or more markets in order to take profitable advantage of any differences in the prices quoted in those markets.

If the price of the same product is different, as between two markets, a dealer, by simultaneously buying in the lower-priced market and reselling in the higher-priced market, stands to make a profit on the transaction (allowing for dealing expenses). Arbitrage thus serves to narrow or eliminate price differentials between markets, with buying in the lower-priced market causing prices to rise there, and selling in the higher-priced market causing prices to fall. See SPOT MARKET, ARBITRAGEUR, SPECULATION, COVERED INTEREST ARBITRAGE.

arbitrage

the buying or selling of PRODUCTS, FINANCIAL SECURITIES or FOREIGN CURRENCIES between two or more MARKETS in order to take profitable advantage of any differences in the prices quoted in these markets. By simultaneously buying in a low-price market and selling in the high-price market a dealer can make a profit from any disparity in prices between them, though in the process of buying and selling the dealer will add to DEMAND in the low-price market and add to SUPPLY in the high-price market, so narrowing or eliminating the price disparity. See SPOT MARKET, FUTURES MARKET, COVERED INTEREST ARBITRAGE.

arbitrage

The simultaneous purchase in one market and sale in another market of a commodity, security,or monies,in the expectation of making a profit on price differences in the differing markets. Generally thought of as involving foreign currency exchanges,in which one enters contracts to buy euros and sell yen and hopefully make money in a moment in time when the exchange rates work out in one's favor (this is highly risky).

References in periodicals archive ?
He should have come directly to Wahid to offer his criticisms rather than do it in public," Arbi added.
Arbi added, however, that even though the House could censure or demote Wahid, it should not, under the presidential system, move to oust him.
Arbi Baghdasarian added 16 points and Eric Jenkins had 12 points and seven assists.
They are Mohamed Nizar Ghazouani from the Centre de Promotion de Football, La Marsa, Mohamed Haithem Bel Arbi from the Centre de Promotion de Football, Zaghouan, Abdelouahab Harrabi from the Centre de Promotion de Football, Sidi Bouzid, Atef Chaabani from the Centre de Promotion de Football, Tejerouine, El Kef, and Amani Boukari (Sports teacher and coach at Association Sportive de la Banque de l'Habitat.
The Masala Arbi Satay, which comes crusted with poppy seeds, combines a crusty, glazed exterior with a delicate interior with flavours that just explode in the mouth.
A Chechen rebel website last night claimed the group was led by Movsar Barayev, the nephew of warlord Arbi Barayev, who ordered the kidnapping and beheading of three British engineers in 1998.
Yesterday Uvai Akhmadov, second-in-command to Arbi Barayev, a warlord whose fighters are based in Urus-Martan, Chechnya's second-largest city, said they did not kill the men.
Arbi Baghdasarian, who was 4 of 6 from 3-point range, scored 20 points to lead the Tornadoes at Muir.
Ourida El Arbi, du RND, a demande au gouvernement de mettre en place une strategie de gestion des concessions agricoles et de revoir le code de la famille en introduisant des mesures a meme de donner la garde des enfants a la mere, meme en cas de remariage.
Chechen deputy prime minister Mr Turpal Atgeriyev said Field Commander Arbi Barayev led the band that kidnapped and murdered the hostages.
Sekouane Fatima, Bouhenni Benziane Naima, Bekhedda Fethia, Messaouer Faiza, Arbi Aouda Keltoum, Benallou Rachida (Affak Relizane), Boutchiche Sihem, Miraoui Lydia, Khelifouche Khadidja, Laifa Nachida, Affak Horiya, Bara Fatima (ASE Alger Centre), Benamara Hanane, Kesri Wahiba, Taknint Kahina, Yala Nacera (ASSN), Benaissa Djamila (Intissar Oran), Bellouche Mahbouba (JK Khroub), Brahimi Rayane, Sedrati Houria, Chaib Adda Asma, Sadou Habiba, Merrouche Imene, Gacem Soulef (FC Constantine), Hadjar Kenza (USF Bejaia).
Troops were also said to be besieging an unspecified number of rebels in the Sidi al Arbi mountain area in the western province of Tlemcen, 275 miles from Algiers, and were preparing to attack their positions.