What do you mean by Arbitrage?

Business & Management
#1

Arbitrage can be described as the process of buying stocks from one exchange at a lower price and selling the same stock on another exchange at a comparatively higher price for profit. For example, you can buy a stock in NSE and sell the same stock in BSE because of the small price difference in both exchanges.

#2

Arbitrage is the simultaneous purchase and sale of the same asset in different markets in order to profit from tiny differences in the asset’s listed price. It exploits short-lived variations in the price of identical or similar financial instruments in different markets or in different forms.

Arbitrage exists as a result of market inefficiencies and it both exploits those inefficiencies and resolves them.

  • Arbitrage is the simultaneous purchase and sale of an asset in different markets to exploit tiny differences in their prices.

  • Arbitrage trades are made in stocks, commodities, and currencies.

  • Arbitrage takes advantage of the inevitable inefficiencies in markets.