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Recent Examples of arbitrage from the Web
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Macro, distressed debt, long-short, dollar-event-driven, cryptocurrency arbitrage?
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Critics argue that the company does little more than corporate real estate arbitrage — leasing a space, spiffing it up, then subleasing it out to other tenants.
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On the other hand, SBBS could actually make sovereign-bond markets more liquid by providing alternative means of collateral, hedging and arbitrage.
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In some other categories, such as macro funds or merger arbitrage, returns are entirely dependent on the manager’s skill.
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Regulatory and tax arbitrage is alive and well in banking—and one Nordic bank is taking advantage.
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The professional traders will mostly be looking to do arbitrage, between the futures and bitcoin itself.
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In August, the arbitrage between Shanghai and London reached the highest in at least seven years, and Chinese zinc imports have risen in parallel as sellers chased higher profits.
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Meanwhile, the markets in Chicago and New York were being linked by the technique of index arbitrage.
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'arbitrage.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
Other Business Terms
Definition of arbitrage
Recent Examples of arbitrage from the Web
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As Ars Technica points out, arbitraging cheap power is a widespread business tactic in industries as diverse as aluminum production and marijuana cultivation.
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Of course, cryptocurrency mining is hardly the first industry to arbitrage electricity prices to make some good's production more profitable.
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Inside the Big Plan to Make Ethereum Go Mainstream Share this episode with your friends Another option is arbitraging price differences between Korean exchanges, Bae said.
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Another puzzle with anomalies is why they are not arbitraged away.
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Korea’s Forex Rules To arbitrage the price gaps between bitcoin venues in Korea and elsewhere, local traders must first exchange their won into a foreign currency, such as the dollar or euro, that’s accepted by overseas cryptocurrency venues.
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Sell the beer at a reasonable price (whatever that means), and all of the sudden it's being arbitraged left and right.
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Flexe is arbitraging the mismatch between supply and demand, taking a commission for each transaction.
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'arbitrage.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
First Known Use of arbitrage
1857
Other Business Terms
Financial Definition of ARBITRAGE
What It Is
Arbitrage is the process of exploiting differences in the price of an asset by simultaneously buying and selling it. In the process the arbitrageur pockets a risk-free return. Differences in prices usually occur because of imperfect dissemination of information.
How It Works
For example, if Company XYZ's stock trades at $5.00 per share on the New York Stock Exchange (NYSE) and the equivalent of $5.05 on the London Stock Exchange (LSE), an arbitrageur would purchase the stock for $5 on the NYSE and sell it on the LSE for $5.05 -- pocketing the difference of $0.05 per share.
Theoretically, the prices on both exchanges should be the same at all times, but arbitrage opportunities arise when they're not. In theory, arbitrage is a riskless activity because traders are simply buying and selling the same amount of the same asset at the same time. For this reason, arbitrage is often referred to as "riskless profit."
Arbitrageurs also try to exploit price differences created by mergers. In some cases, they purchase the shares of companies that are the targets of purchase offers, hoping to pocket the difference between the trading price and the eventual cash payment resulting from the merger. Even though this type of strategy is referred to as "arbitrage," it's a bit of a misnomer because there's always a risk that a merger will not actually happen. Because it's not risk-free, merger arbitrage is not "arbitrage" in its truest sense.
Why It Matters
Only large institutional investors and hedge funds are capable of taking advantage of arbitrage opportunities. Because they're able to trade large blocks of shares, they can pocket millions in arbitrage profits even if the spread between two security prices is small (and it usually is just pennies).
By contrast, individual investors typically don't have the large sums of money needed to take advantage of arbitrage opportunities, and trading fees would eat up any profits an individual arbitrageur hoped to secure. Institutional investors aren't burdened by these same limitations.
Of course, small investors and entrepreneurs take advantage of much smaller arbitrage opportunities every single day. For example, if you've ever purchased a bargain-priced item at a garage sale or flea market, and then sold that item for a higher price on eBay, then you've profited from a form of arbitrage.
The main creator of arbitrage opportunity used to be a lack of real-time communication about prices in other markets, but modern technology has reduced the number of arbitrage opportunities out there. The relatively few arbitrage opportunities that do exist are elusive and don't last for long -- when people realize that a security is cheaper in one market than another, their interest in exploiting the opportunity will drive up the price of the "cheap" security and drive down the price of the "expensive" security until there is no longer a price difference. In this manner, arbitrage does a good job of ensuring equilibrium in the markets.
ARBITRAGE Defined for English Language Learners
Definition of arbitrage for English Language Learners
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business : the practice of buying something (such as foreign money, gold, etc.) in one place and selling it almost immediately in another place where it is worth more
Law Dictionary
legal Definition of arbitrage
Origin and Etymology of arbitrage
Learn More about arbitrage
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See words that rhyme with arbitrage Britannica.com: Encyclopedia article about arbitrage
Seen and Heard
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