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Gangesh Rameshkumar

Figure it out • 1d

Term of the day: Arbitrage Arbitrage is the exploitation of market inefficiencies where the price of an asset is different in different markets For example, Company X's stock is listed at 20$ on the New York Stock Exchange(NYSE), but $20.05 on the London Stock Exchange(LSE). This is an opportunity for arbitrage. An arbitrageur can buy stock from the NYSE and sell it on the LSE, making a risk-free profit. Though in principle, an arbitrage guarantees a risk free profit, with technological advancements in trading, it's becoming more and more difficult to profit from market errors. Any pricing error is usually acted upon quickly, and the opportunity is lost within a matter of seconds

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