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.
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sellers, imposing costs on investors and generating riskless profits for
Pure arbitrage yields riskless profits but is difficult to find in markets and if found, difficult to sustain.
That is, riskless profits could be made by purchasing the corporation, selling all assets, repaying all debts, and pocketing the excesses.
To grab these Riskless Profits, though, there are several structural and measurement barriers and faulty paradigms that all parties must overcome.
Any organization truly serious about generating Riskless Profits needs to remove the flawed paradigms and conventional wisdoms about RPP (see Exhibit A).
To fully realize Riskless Profits, one must first accept that promotional sales lifts are truly incremental to the brand, category and retailer.
Once the lower-bound estimate is established, we can test for the potential to make Riskless Profits.
Even during bubbles and panics, which are prime moneymaking opportunities for savvy investors, there are no riskless profits and no way to forecast market turning points.
This condition eliminates the possibility of earning riskless profits from the interest rate differential.
Without this factor, investors could make riskless profits through arbitrage operations.