- a simultaneous purchase and sale in two separate financial markets in order to profit from a price difference existing between them
- a buying of a large number of shares in a corporation in anticipation of, and with the expectation of making a profit from, a merger or takeoverin full risk arbitrage
Origin of arbitrageLate Middle English from French from arbitrer, to judge from Classical Latin arbitrari: see arbitrate; for 2, from French arbitrage
intransitive verb-·traged·, -·trag·ing
intransitive verbar·bi·traged, ar·bi·trag·ing, ar·bi·trag·es
Origin of arbitrageMiddle English arbitration from Old French from arbitrer to judge from Latin arbitrārī to give judgment ; see arbitrate .
(countable and uncountable, plural arbitrages)
- The practice of quickly buying and selling foreign currencies in different markets in order to make a profit
- The purchase of the stock of a future takeover target, with the expectation that the stock will be sold to the person executing the takeover at a higher price
- Any market activity in which a commodity is bought and then sold quickly, for a profit which substantially exceeds the transaction cost
(third-person singular simple present arbitrages, present participle arbitraging, simple past and past participle arbitraged)
- (intransitive, finance) To employ arbitrage
- (finance) To engage in arbitrage in, between, or among
arbitrage - Investment & Finance Definition
A situation in which a trader attempts to profit from minute differences in price for the same security on different stock or futures markets. Traders that employ this strategy are called arbitrageurs and use specially designed computer programs to identify price discrepancies.