Adjective "arbitrage" definition and examples

(Arbitrage may not be an adjective, but it can be used as an adjective, click here to find out.)

Pronunciation

/ˈɑːbɪtrɪdʒ//ˌɑːbɪˈtrɑːʒ/

Definitions and examples

noun

The simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.
  1. 'This price differential offered the Patels an opportunity to profit through arbitrage.'
  2. 'Any value difference should generate arbitrage profits and the elimination of the divergence.'
  3. 'Attracted by the opportunity for arbitrage with the stock market, hedge funds have also been big buyers of convertible bonds.'
  4. 'Second, there may be opportunities for tax arbitrage.'
  5. 'The arbitrageur does this, of course, to make a profit but the effect of arbitrage is to equalize prices or interest rates between markets, provided there is completely free movement of capital.'
  6. 'Professionals who engage in arbitrage are known as arbitrageurs.'
  7. 'An increase in Chinese interest rates will attract more hot money in search of arbitrage profits, and that would increase the domestic money supply.'
  8. 'With deals at an eight-year low, the fund's managers could not find enough arbitrage opportunities.'
  9. 'The banks have historically dominated this arbitrage market, mostly through their derivatives or proprietary trading desks.'
  10. 'While the arbitrage spreads measured using bid and ask prices are smaller than using only bid prices, the apparent arbitrage opportunities in the first year were not eliminated.'

verb

Buy and sell assets using arbitrage.
  1. 'As an investment activity it is driven by tax-levered debt, tax minimisation, capital gains arbitrage and profiteering.'
  2. 'These ratios have traditionally been used to show stock market tops and bottoms, but they have lost some utility lately because of the predilection to arbitrage skews the results.'
  3. 'Since pricing would become transparent and structural advantages would be arbitraged away, competitive advantage would stem more and more from identifying and satisfying customer needs.'
  4. 'However, as Bliss and Ronn suggest, the tax argument relies implicitly on the unlikely absence of a tax-exempt entity which can ignore the tax effects and arbitrage the pricing errors.'
  5. 'Other institutions arbitrage returns on bonds or loans with relatively high yields through securitizations.'
  6. 'This enables telecoms to arbitrage international cost differences to boost profitability.'
  7. 'Does a visit to your corner shop invoke an urge to arbitrage on say, the price of a pint of milk from the supermarkets?'
  8. 'It initially professed to arbitrage international fixed income markets but over time got significantly into equities.'
  9. 'When prices deviate from this theoretical benchmark, money moves quickly to arbitrage away any differences.'
  10. 'Since even hedge funds struggle to make decent returns in this market, they are driven further into risky new investments, such as arbitraging the statistical differences between one convertible bond and another.'

More definitions

1. Finance. the simultaneous purchase and sale of the same securities, commodities, or foreign exchange in different markets to profit from unequal prices.

2. Archaic. arbitration. verb (used without object), arbitraged, arbitraging.

3. Finance. to engage in arbitrage.

More examples(as adjective)

"sellings can be arbitrage."

"transactions can be arbitrage."

"tradings can be arbitrage."

"strategists can be arbitrage."

"options can be arbitrage."

More examples++

Origin

Late Middle English (originally denoting the exercise of individual judgement): from French, from arbitrer ‘give judgement’, from Latin arbitrari (see arbitrate). The current sense dates from the late 19th century.