Riskless arbitrage

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Riskless arbitrage

The simultaneous purchase and sale of the same asset to yield a profit.

Riskless Arbitrage

The act of buying an asset and immediately selling the same asset for a higher price. For example, one may execute two orders at once, one to buy a security at $10 and one to sell the same security at $12. The short time frame involved means that riskless arbitrage occurs without investment; there is no rate of return or anything like it because the asset is immediately sold. One simply makes a profit on the deal.
References in periodicals archive ?
About half of Kuwait's 30 billion dinar ($104 billion) development is likely to be financed via state-backed loans from banks and the prospect of risk-free profits has sent lenders' shares soaring over the past month or so.
JUST imagine you were in charge of a large organisation and had the chance to introduce a new product line on the internet, with the potential to generate sales exceeding a billion pounds a year and risk-free profits of pounds 50 million.
75m workers in large companies are happily beating the share price doom and gloom that ordinary investors are struggling to avoid - and enjoying risk-free profits from the stock market.
Dealers think they can make risk-free profits betting on the inevitable.
Citibank, which makes millions of dollars in fees under the old, taxpayer subsidized system, is working with Congressional leaders to eliminate these reforms, and insure that taxpayers continue to guarantee them big, risk-free profits.
Although program trading has become a catch-allphrase, it usually refers to "arbitrage," which sounds daring but is actually a strtegy that institutional investors can use to lock in risk-free profits by exploiting differnces that develop between the value of teh actual stocks and the futures contract.
The FHP acquisition by PacifiCare was accomplished via a November 21, 1996 joint FHP/PacifiCare Registration Statement and Proxy (the "FHP/PacifiCare Merger Proxy") which falsely assured the FHP shareholders that the consideration to be paid and the related transactions were "fair" and in their "best interests" -- warning them that an investment in Talbert via exercise of the Talbert Rights involved "substantial risks," including the "substantial risk of loss," while concealing the true value of FHP and Talbert and serious existing conflicts of interest, in that top FHP insiders would obtain millions in risk-free profits for themselves by selling Talbert in just the next few months.