Market Arbitrage

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DEFINITION of 'Market Arbitrage'

Purchasing and selling the same security at the same time in different markets to take advantage of a price difference between the two separate markets.

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BREAKING DOWN 'Market Arbitrage'

An arbitrageur would short sell the higher priced stock and buy the lower priced one. The profit is the spread between the two assets.

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RELATED FAQS
  1. Where do penny stocks trade?

    Generally, penny stocks are traded through the use of the Over the Counter Bulletin Board (OTCBB) and through pink sheets. ... Read Full Answer >>
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    Some penny stocks, those using the definition of trading for less than $5 per share, are traded on regular exchanges such ... Read Full Answer >>
  3. How does the stock market react to changes in the Federal Funds Rate?

    The stock market reacts to changes in the federal funds rate in various ways depending on where it is in the business cycle. ... Read Full Answer >>
  4. What are the requirements for being a Public Limited Company?

    The requirements for an entity to be considered a public limited company (PLC) include registration requirements, establishing ... Read Full Answer >>
  5. Is there a difference between financial spread betting and arbitrage?

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