arbitrage

  

Definition

Profiting from differences in prices or yields in different markets. 'Arbitrageurs' buy a commodity, currency, security or any other financial instrument in one place and immediately sell it at a higher price to a ready buyer at another place completing both ends of the transaction usually within a few seconds. Arbitrage is a sophisticated form of non-speculative, risk-free betting because it involves dealings where returns and prices are definite, fixed, and known. See also speculation.

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