Dictionary
Thesaurus
Encyclopedia
Translator
Web

arbitrage

 - 8 dictionary results

ar⋅bi⋅trage

[ahr-bi-trahzh for 1, 3; ahr-bi-trij for 2] noun, verb, -traged, -trag⋅ing.
–noun
1. Finance. the simultaneous purchase and sale of the same securities, commodities, or foreign exchange in different markets to profit from unequal prices.
2. Archaic. arbitration.
–verb (used without object)
3. Finance. to engage in arbitrage.

Origin:
1470–80; < MF, equiv. to arbitr(er) to arbitrate, regulate (< L arbitrārī; see arbitrate ) + -age -age
Dictionary.com Unabridged
Based on the Random House Dictionary, © Random House, Inc. 2009.
Cite This Source Link To arbitrage
ar·bi·trage   (är'bĭ-träzh')   
n.  The purchase of securities on one market for immediate resale on another market in order to profit from a price discrepancy.
intr.v.   ar·bi·traged, ar·bi·trag·ing, ar·bi·trag·es
To be involved in arbitrage.

[Middle English, arbitration, from Old French, from arbitrer, to judge, from Latin arbitrārī, to give judgment; see arbitrate.]
The American Heritage® Dictionary of the English Language, Fourth Edition
Copyright © 2009 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
Cite This Source
Main Entry:  arbitrage1
Part of Speech:  n
Definition:  the process of arbitration; decision by arbitration
Etymology:  Latin arbitrari 'to give judgment'
Main Entry:  arbitrage2
Part of Speech:  n
Definition:  authoritative decision or exercise of judgment
Etymology:  Latin arbitrari 'to give judgment'
Main Entry:  arbitrage
Part of Speech:  v
Definition:  to engage in arbitrage
Etymology:  Latin arbitrari 'to give judgment'
Usage:  intransitive
Dictionary.com's 21st Century Lexicon
Copyright © 2003-2009 Dictionary.com, LLC
Cite This Source
Financial Dictionary

Arbitrage

The simultaneous purchase and selling of an asset in order to profit from a differential in the price. This usually takes place on different exchanges or marketplaces. Also known as a "riskless profit".

Investopedia Commentary

Here's an example of arbitrage: Say a domestic stock trades also on a foreign exchange in another country, where it hasn't adjusted for the constantly changing exchange rate. A trader purchases the stock where it is undervalued and short sells the stock where it is overvalued, thus profiting from the difference. Arbitrage is recommended for experienced investors only.

Related Links

Put-Call Parity and Arbitrage Opportunity
Trading the Odds with Arbitrage

See also: Arbitrage Trading Program (ATP), EMH, Exchange Rate, Futures Spread, Market Arbitrage, Risk

Investopedia.com. Copyright © 1999-2005 - All rights reserved. Owned and Operated by Investopedia Inc.
Cite This Source
Financial Dictionary

arbitrage

The simultaneous purchase and sale of substantially identical assets in order to profit from a price difference between the two assets. As a hypothetical example, if General Electric common stock trades at $45 on the New York Stock Exchange and at $44.50 on the Philadelphia Stock Exchange, an investor could guarantee a profit by purchasing the stock on the Philadelphia Stock Exchange and simultaneously selling the same amount of stock on the NYSE. Of course, the price difference must be sufficiently great to offset commissions. Arbitrage may be employed by using various security combinations including stock and options and convertibles and stock. See also basis trading, risk arbitrage.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
Cite This Source
Legal Dictionary

Main Entry: ar·bi·trage
Pronunciation: 'är-b&-"träzh
Function: noun
Etymology: French, literally, arbitration, decision-making
1 : the purchase of a security, commodity, or foreign currency in one market for the purpose of immediately selling it at a higher price in another market
2 : the purchase of the stock of a takeover target esp. for the purpose of selling it to the raider for a profit
Merriam-Webster's Dictionary of Law, © 1996 Merriam-Webster, Inc.
Cite This Source
Search another word or see arbitrage on Thesaurus | Reference
FacebookTwitterFollow us: