Garbatrage

AAA

DEFINITION of 'Garbatrage'

An increase in price and trading volume in a particular sector of the economy that occurs as a result of a recent takeover, which initiates a change in sentiment toward the sector.

Garbatrage is also known as "rumortrage".

INVESTOPEDIA EXPLAINS 'Garbatrage'

Garbatrage is usually used to refer to firms that are not directly related to the takeover. Speculators feel that the initial takeover is a precursor to more takeovers within the sector. Proponents of behavioral finance theory would view this psychological impact as evidence that supports their theory.

RELATED TERMS
  1. Takeover

    A corporate action where an acquiring company makes a bid for ...
  2. Arbitrage

    The simultaneous purchase and sale of an asset in order to profit ...
  3. Behavioral Finance

    A field of finance that proposes psychology-based theories to ...
  4. Market

    1. A medium that allows buyers and sellers of a specific good ...
  5. Public Company

    A company that has issued securities through an initial public ...
  6. Sector

    1. An area of the economy in which businesses share the same ...
Related Articles
  1. Mergers And Acquisitions: Understanding ...
    Fundamental Analysis

    Mergers And Acquisitions: Understanding ...

  2. Trading The Odds With Arbitrage
    Options & Futures

    Trading The Odds With Arbitrage

  3. The Basics Of Mergers And Acquisitions
    Options & Futures

    The Basics Of Mergers And Acquisitions

  4. War's Influence On Wall Street
    Bonds & Fixed Income

    War's Influence On Wall Street

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center