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Risk Arbitrage (Noun)

Meaning

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.

Classification

Nouns denoting acts or actions.

Examples

  • The investment firm engaged in a form of risk arbitrage, betting on the success of the corporate takeover deal by buying and selling the relevant stocks simultaneously.
  • The takeover failed, leaving the arbitrageur who had engaged in risk arbitrage facing significant financial losses due to their high-stakes bet.
  • As the deadline for the corporate takeover drew near, investors turned to risk arbitrage to capitalize on the impending deal.
  • In risk arbitrage, timing and accurate analysis are crucial in mitigating the substantial losses that may result if the anticipated deal falls through.
  • Engaging in risk arbitrage involves navigating the intricacies of merger negotiations while navigating high-risk trading to yield a substantial profit if successful.

Synonyms

  • Takeover Arbitrage
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