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    arbitrage

    0  Views: 571 Answers: 1 Posted: 11 years ago

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    Definition of 'Arbitrage'
    The simultaneous purchase and sale of an asset in order to profit from a difference in the price. It is a trade that profits by exploiting price differences of identical or similar financial instruments, on different markets or in different forms. Arbitrage exists as a result of market inefficiencies; it provides a mechanism to ensure prices do not deviate substantially from fair value for long periods of time.



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