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. The New York Times Financial Glossary

* * *

arbitrage ar‧bi‧trage [ˈɑːbtrɑːʒ ǁ ˈɑːr-] noun [uncountable] FINANCE
1. buying something such as a raw material or currency in one place and selling it immediately in another, in order to make a profit from price differences between the two places:

• Analysts attributed the activity to arbitrage buying: traders bought cocoa in New York to sell at a profit in London.

2. buying and selling shares of two companies involved, or that may be involved, in a takeover, in order to make a profit from differences in the share values of the two companies:

• The company incurred losses in risk arbitrage - or takeover-stock speculation - arising from last year's slump in U.S. merger activity.

exˈchange ˌarbitrage
FINANCE a situation in which dealers can make a profit because of the temporary difference in the value between two currencies in relation to a third currency

* * *

   The action of profiting from the correction of price or yield anomalies in markets. Often this will involve taking a position in one market or instrument and an offsetting position in another. As prices or yields move back into line, all positions may be profitably closed out. An arbitrageur is an individual or institution practising arbitrage.

* * *

arbitrage UK US /ˌɑːbɪˈtrɑːʒ/ US  /ˈɑːrbɪtrɑːʒ/ noun [U] STOCK MARKET
the practice of buying something, such as shares or currency, in one place and selling them in another where you can get a higher price at the same time: arbitrage buying/selling »

Traders said a rise in the peso's value made Mexican share prices more expensive compared with shares sold in New York and sparked some arbitrage selling.

»

The importance of computers is that arbitrage opportunities can be quickly spotted and capitalized upon.

See also EXCHANGE ARBITRAGE(Cf. ↑exchange arbitrage), MARKET ARBITRAGE(Cf. ↑market arbitrage)

Financial and business terms. 2012.

Look at other dictionaries:

  • ARBITRAGE — Au lieu de porter leurs contestations devant les tribunaux, il arrive fréquemment que les particuliers s’adressent à d’autres personnes en vue d’arbitrer un différend. L’institution de l’arbitrage est de tous les temps. Il est permis de penser… …   Encyclopédie Universelle

  • Arbitrage — (von französisch arbitrage , lat. arbitratus = Gutdünken, freie Wahl, freies Ermessen) bezeichnet das Ausnutzen von Preisunterschieden für gleiche Waren auf verschiedenen Märkten. Infolge der ausgleichenden Wirkung der Arbitrage passen sich die… …   Deutsch Wikipedia

  • arbitrage — ar·bi·trage / är bə ˌträzh/ n [French, literally, arbitration, decision making] 1: the purchase of a security, commodity, or foreign currency in one market for the purpose of immediately selling it at a higher price in another market 2: the… …   Law dictionary

  • arbitrage — ARBITRAGE. subst. m. Jugement d un différent par Arbitre. Mettre quelque chose en arbitrage. Se soumettre à l arbitrage. Subir l arbitrage. S en tenir à l arbitrage …   Dictionnaire de l'Académie Française 1798

  • arbitrage — Arbitrage. s. m. Jugement d un differend par des arbitres. Mettre quelque chose en arbitrage. se sousmettre à l arbitrage. subir l arbitrage. s en tenir à l arbitrage …   Dictionnaire de l'Académie française

  • 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

  • Arbitrage — (fr., spr. Arbitrahsch), 1) der Rechtsspruch des von den streitenden Parteien gewählten Schiedsrichters; 2) (Handlsw.), die Berechnung, welche man anstellt, um zu entscheiden, in welcher Münzsorte man am vortheilhaftesten eine Zahlung leiste… …   Pierer's Universal-Lexikon

  • arbitrage — (n.) exercise of the function of an arbitrator, late 15c., from O.Fr. arbitrage arbitration, judgment, from arbitrer to arbitrate, judge, from L.L. arbitrari, from L. arbiter (see ARBITER (Cf. arbiter)) …   Etymology dictionary

  • arbitrage — c est sentence d arbitre, Arbitrium. Arbitrage ou compromis, Arbitrium, Compromissum …   Thresor de la langue françoyse

  • Arbitrage — Ar bi*trage, n. [F., fr. arbiter to give judgment, L. arbitrari.] 1. Judgment by an arbiter; authoritative determination. [Archaic] [1913 Webster] 2. (Com.) A traffic in bills of exchange (see {Arbitration of Exchange}). [1913 Webster] 3.… …   The Collaborative International Dictionary of English

  • Arbitrage — (franz., spr. āsch , v. lat. arbitrium. Entscheidung), im allgemeinen die Erwägung und Entscheidung über die günstigsten unter den an verschiedenen Plätzen sich bietenden Einkaufs und Verkaufsgelegenheiten, findet insbes. Anwendung auf… …   Meyers Großes Konversations-Lexikon

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.