Arbitrage

Arbitrage in the stock market involves the simultaneous purchase of a security in one market and the sale of it or a derivative product in another market to profit from price differentials between the two markets. The price of the two items should somehow be related, and should move together. When the two markets get out of whack, a nimble arbitrageur can make money by buying the less expensive one and selling the one that's more expensive.

 

 

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