Related Words

Arbitrage: Arbitrage is the technique of simultaneously buying at a lower price in one market and selling at a higher price in another market to make a profit on the spread between the prices. Although . . . View Full Definition

Arbitrageur: One who profits from the differences in price when the same, or extremely similar, security, currency, or commodity is traded on two or more markets. The Arbitrageur profits by simultaneousl . . . View Full Definition

Risk Arbitrage: Traditionally, the simultaneous purchase of stock in a company being acquired and the sale of stock of the acquirer. Modern risk arbitrage focuses on capturing the spreads between the market . . . View Full Definition

Arbitrage Pricing Theory (APT): An alternative model to the capital asset pricing model developed by Stephen Ross and based purely on arbitrage arguments. The APT implies that there are multiple risk factors that need to b . . . View Full Definition

Currency Arbitrage: Money.

Arbitrage-Free Option-Pricing Models: Yield curve option-pricing models.

Arbitrage Bonds: Municipality issued bonds issued intended to gain an interest rate advantage by refunding a higher-rate bond in ahead of their call date. Lower-rate refunding issue proceeds are invested in . . . View Full Definition

Index Arbitrage: A division of the CME established in 1982 for trading stock index products and options.

Covered Interest Arbitrage: A strategy that involves writing a call option on securities that the investor owns. See: Covered or hedge option strategies.

Convertible Arbitrage: The interest rate on caps is adjustable and is pegged to Treasury security rates. They can be exchanged at par value for common stock or cash after the next period's dividend rates are revealed.