 Definition of Arbitrage - Finance dictionary
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Arbitrage ((See Chapters 15, 28 and 31 of the Vernimmen))
With no overall outlay of funds or assumption of risk (in theory, at least!), arbitrage involves combining several transactions that ultimately yield a profit. Thanks to arbitrage, all prices for a given asset are equal at a given point in time. Arbitrage ensures fluidity between markets and contributes to their liquidity. It is the basic behavior that guarantees the efficient market.
"Arbitrage" arises whenever it is possible for an investor (the "arbitrageur") to enter into simultaneous trades which - once combined - result in locking up a profit, therefore both exploiting the arbitrage opportunity, and contributing to the market efficiency through the induced convergence of the once diverging prices. Arbitrage opportunities can arise where the same company has shares trading on several stock exchanges, where the cash and futures contracts in relation with a commodity diverge, or where it is possible to arbitrage between various currencies and their related interest rates.
Arbitrage ((See Chapters 15, 28 and 31 of the Vernimmen))
With no overall outlay of funds or assumption of risk (in theory, at least!), arbitrage involves combining several transactions that ultimately yield a profit. Thanks to arbitrage, all prices for a given asset are equal at a given point in time. Arbitrage ensures fluidity between markets and contributes to their liquidity. It is the basic behavior that guarantees the efficient market.
"Arbitrage" arises whenever it is possible for an investor (the "arbitrageur") to enter into simultaneous trades which - once combined - result in locking up a profit, therefore both exploiting the arbitrage opportunity, and contributing to the market efficiency through the induced convergence of the once diverging prices. Arbitrage opportunities can arise where the same company has shares trading on several stock exchanges, where the cash and futures contracts in relation with a commodity diverge, or where it is possible to arbitrage between various currencies and their related interest rates.
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Definitions of terms begining
with the same letter as "Arbitrage"
:
ABS
ADR
ADR or American Depositary Receipt
AG or Aktiengesellschaft
AIM or "Alternative Investment Market
ALM
ANAV
APE
APR or Annual Percentage Rate
APT
APV
Abandonment risk
Abeyance
Accelerated book-building
Accelerated depreciation
Accelerated share repurchase
Acceleration, Acceleration clause
Account balancing
Account receivable aging
Accountant letter
Accounting criteria of value creation
Accounting currency risk
Accounting procedures with an impact on earnings
Accounts payable
Accounts receivable
Accredited investors
Accretion
Accretive
Accrual basis accounting
Accrual bond
Accruals
Accrued benefits
Accrued expense
Accrued income
Accrued interests
Acid test ratio
Acquisitions
Act of God
Acting in concert
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Active Fund Management
Actuary
Adjustable rate preference shares
Adjustable-rate debt security
Adjusted Net Asset Value
Adjusted present value, APV
Administrative synergy
Advance dividend
Advance rate
Affiliates
Affirmative covenant
African Development Bank (ADB)
Agency costs
Agency theory
Agent bank
Agent fee
Aging, Ageing, aging balance, ageing balance
Agreement in principle
All-in cost
All-share transaction
Alliance
Allocative efficiency
Allotment
Alpha
Alternative assets
Alternative management
American Depositary Receipt
American option
Amortisation
Amortisation of the loan
Angel investors or Business angels
Annual Premium Equivalent
Annual effective interest rate
Annual meeting
Annualise or annualised
Annuity
Annuity
Annuity factor
Antidilution
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Antitrust laws
Apparent dilution
Appraisal clause
Appraisal or Valuation
Arbitrage
Arbitrage pricing theory, APT
Arbitration, Arbitrators
Arm's length
Arranger
Arranging the deal
Arrears, Unpaid
Articles of Incorporation or Articles of Association
Ask or Offer or Bid or Spread or Bid-Ask
Asset allocation
Asset backed commercial paper
Asset backed securities
Asset beta
Asset contribution
Asset coverage
Asset intensive
Asset stripping
Asset turnover
Asset-Liability Management
Assets
Assignment, assignor and assignee
Associate
Associated undertaking
Asymmetry - issuer/investor
Asymmetry - option
Asymmetry - shareholder / creditor
At par, Above par, Below par
At the money
Atypical silent partner
Auction
Auction clause
Audit trail
Average collection
Average life
Average life of a bond
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Arbitrage ((See Chapters 15, 28 and 31 of the Vernimmen))
With no overall outlay of funds or assumption of risk (in theory, at least!), arbitrage involves combining several transactions that ultimately yield a profit. Thanks to arbitrage, all prices for a given asset are equal at a given point in time. Arbitrage ensures fluidity between markets and contributes to their liquidity. It is the basic behavior that guarantees the efficient market.
"Arbitrage" arises whenever it is possible for an investor (the "arbitrageur") to enter into simultaneous trades which - once combined - result in locking up a profit, therefore both exploiting the arbitrage opportunity, and contributing to the market efficiency through the induced convergence of the once diverging prices. Arbitrage opportunities can arise where the same company has shares trading on several stock exchanges, where the cash and futures contracts in relation with a commodity diverge, or where it is possible to arbitrage between various currencies and their related interest rates.
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