arbitrage

Meanings

• Noun

  The practice of taking advantage of the price differences for the same security or commodity in two different markets.

  - "In the financial markets, arbitrage is used to exploit price discrepancies between different markets."
  - "The arbitrage opportunity arose due to the difference in the price of oil in the New York and London markets."

• Noun

  A transaction that exploits the price difference between two or more markets.

  - "Arbitrage transactions involve buying an asset in one market and selling it in another market to profit from the price difference."
  - "The success of an arbitrage trade depends on the ability to execute the transaction quickly and efficiently."

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Rhymes

Words rhyming with arbitrage
margins , paragons , arraigns

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Variants

List of all variants of arbitrage that leads to same result
arbitrage , arbitrages , arbitraged , arbitraging

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Etymology

origin and the way in which meanings have changed throughout history.

The term 'arbitrage' comes from the Old French word 'arbitre', meaning 'judge' or 'referee'. In financial markets, arbitrage refers to the role of a neutral third party who helps resolve disputes and sets fair prices.

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Trivia

Any details, considerations, events or pieces of information regarding the word

1. Arbitrage was a common practice during the Roman Empire, where merchants would buy goods in one province and sell them in another province where the price was higher.

2. The term 'arbitrage' is also used in sports, where an arbitrator is appointed to resolve disputes between teams or players.

3. The largest arbitrage transaction in history took place in 1992, when George Soros made a bet against the British pound, resulting in a profit of over $1 billion.

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Related Concepts

informations on related concepts or terms closely associated with the word. Discuss semantic fields or domains that the word belongs to

1. Spot Market: A market where transactions are settled on the spot or on the day of the transaction.

2. Forward Market: A market where transactions are settled at a future date.

3. Hedge Fund: A type of investment vehicle that uses various strategies, including arbitrage, to generate profits.

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Culture

Any cultural, historical, or symbolic significance of the word. Explore how the word has been used in literature, art, music, or other forms of expression.

Arbitrage has been a significant concept in finance and economics since ancient times. The Babylonian Code of Hammurabi, one of the earliest known legal codes, contained provisions for arbitrage. In modern times, arbitrage has been a subject of interest in literature, art, and music.

How to Memorize "arbitrage"

1. visualize
   

   - Imagine two markets, each with a different price for the same asset. Visualize buying the asset in the market with the lower price and selling it in the market with the higher price.
   - Consider the potential risks and rewards of an arbitrage transaction, including transaction costs and market volatility.

2. associate
   

   - Associate the term 'arbitrage' with the concept of taking advantage of price discrepancies between different markets.
   - Think of arbitrage as a way to profit from the inefficiencies in financial markets.

3. mnemonics
   

   - Remember the phrase 'Buy low, sell high' to help remember the definition of arbitrage.
   - Use the acronym 'A-R-B' to stand for 'Arbitrage - Buy low, Sell high'.

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