risk arbitrage

Traditionally, the simultaneous purchase of stock in a company being acquired and the sale of stock of the acquirer. Modern risk arbitrage focuses on capturing the spreads between the market value of an announced takeover target and the eventual price at which the acquirer will buy the target's shares. Bloomberg Financial Dictionary

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risk arbitrage risk arbitrage arbitrage

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risk arbitrage UK US noun [U] FINANCE, STOCK MARKET
the practice of buying and selling shares in two companies that are involved in a takeover in order to make a profit from the difference in their share prices: »

The strong rebound in US merger activity brought a renaissance in takeover-stock investing, known as risk arbitrage.


Financial and business terms. 2012.

Look at other dictionaries:

  • Risk arbitrage — Risk arbitrage, or merger arbitrage, is an investment or trading strategy often associated with hedge funds. Two principal types of merger are possible: a cash merger, and a stock merger. In a cash merger, an acquirer proposes to purchase the… …   Wikipedia

  • risk arbitrage — The purchase of stock in a corporation that appears to be the target of an imminent takeover in the hope of making large profits if the takeover occurs. Dictionary from West s Encyclopedia of American Law. 2005. risk arbitrage …   Law dictionary

  • Risk arbitrage — Speculation on perceived mispriced securities, usually in connection with merger and acquisition deals. Mike Donatelli, John Demasi, Frank Cohane, and Scott Lewis are all hardcore arbs. They had a huge BT/MCI position in the summer of 1997, and… …   Financial and business terms

  • risk arbitrage — /ˌrɪsk ɑ:bɪtrɑ:ʒ/ noun the business of buying shares in companies which are likely to be taken over and so rise in price …   Dictionary of banking and finance

  • Risk Arbitrage — A broad definition for three types of arbitrage that contain an element of risk: 1) Merger and acquisition arbitrage The simultaneous purchase of stock in a company being acquired and the sale (or short sale) of stock in the acquiring company. 2) …   Investment dictionary

  • risk arbitrage — noun arbitrage involving risk; as in the simultaneous purchase of stock in a target company and sale of stock in its potential acquirer; if the takeover fails the arbitrageur may lose a great deal of money • Syn: ↑takeover arbitrage • Hypernyms:… …   Useful english dictionary

  • risk arbitrage — Fin arbitrage without certainty of profit …   The ultimate business dictionary

  • arbitrage — [är′bə träzh΄] n. [LME < Fr < arbitrer, to judge < L arbitrari: see ARBITRATE; for 2, < Fr arbitrage] 1. a simultaneous purchase and sale in two separate financial markets in order to profit from a price difference existing between… …   English World dictionary

  • risk arbitrageur — /rɪsk ˌɑ:bɪtrɑ: ʒɜ:/ noun a person whose business is risk arbitrage …   Dictionary of banking and finance

  • Arbitrage — For the upcoming film, see Arbitrage (film). Not to be confused with Arbitration. In economics and finance, arbitrage (IPA: /ˈɑrbɨtrɑːʒ/) is the practice of taking advantage of a price difference between two or more markets: striking a… …   Wikipedia

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