Arbitrage (Verb)
Meaning
Practice arbitrage, as in the stock market.
Classification
Verbs of buying, selling, owning.
Examples
- Hedge funds often try to practice arbitrage by identifying mispriced assets and exploiting the resulting market inefficiencies for profit.
- Market makers can earn money by arbitrage, buying securities at a low price and immediately reselling them for a higher price.
- Arbitrage opportunities arise when the same stock is trading at different prices in two separate markets, allowing traders to profit from the difference.
- A common strategy for practicing arbitrage involves buying convertible bonds while simultaneously short-selling the underlying stock to profit from price discrepancies.
- Increasingly sophisticated algorithms have enabled investors to practice arbitrage by rapidly identifying and capitalizing on minor pricing anomalies in global financial markets.