The simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.
- Here we look at the concept of arbitrage, how market makers utilize ‘true arbitrage,’ and, finally, how retail investors can take advantage of arbitrage opportunities.
- While the arbitrage spreads measured using bid and ask prices are smaller than using only bid prices, the apparent arbitrage opportunities in the first year were not eliminated.
- Attracted by the opportunity for arbitrage with the stock market, hedge funds have also been big buyers of convertible bonds.
Buy and sell assets using arbitrage.
- The trend shows that ‘if there's an arbitrage opportunity, it will get arbitraged away,’ says a pleased Gus Sauter, chief investment officer of Vanguard Group, which runs $350 billion in indexed mutual funds.
- It's a worldwide market, and in a sense it's a market in which interest rates in various different localities and for various different instruments are all arbitraged.
- Since even hedge funds struggle to make decent returns in this market, they are driven further into risky new investments, such as arbitraging the statistical differences between one convertible bond and another.
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