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Takeover 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

  • Takeover arbitrage is a type of investment strategy that involves risk and can result in significant losses if not managed properly.
  • In takeover arbitrage, investors buy the target company's stock and short sell the acquirer's stock, hoping to profit from the spread between the two prices.
  • Arbitrageurs who engage in takeover arbitrage must carefully analyze the risks involved and set clear profit targets to avoid significant losses.
  • If the takeover falls through, the arbitrageur may lose a great deal of money due to the subsequent drop in the target company's stock price.
  • To mitigate risks in takeover arbitrage, investors often use hedging strategies, such as options or other derivatives, to limit potential losses.

Synonyms

  • Risk Arbitrage

Hypernyms

  • Arbitrage
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