BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Arbitrage describes the act of buying a security in one market and simultaneously selling it in another market at a higher price, thereby enabling investors to profit from the temporary difference in cost per share.

Detailed explanation-2: -Definition: Arbitrage is the process of simultaneous buying and selling of an asset from different platforms, exchanges or locations to cash in on the price difference (usually small in percentage terms). While getting into an arbitrage trade, the quantity of the underlying asset bought and sold should be the same.

Detailed explanation-3: -Arbitrage means taking advantage of price differences across markets to make a buck. If a currency, commodity or security-or even a rare pair of sneakers-is priced differently in two separate markets, traders buy the cheaper version and then sell it at the higher price to make money.

Detailed explanation-4: -A More Complicated Arbitrage Example Suppose you have $1 million and you are provided with the following exchange rates: USD/EUR = 1.1586, EUR/GBP = 1.4600, and USD/GBP = 1.6939. With these exchange rates, there is an arbitrage opportunity: Sell dollars to buy euros: $1 million ÷ 1.1586 = €863, 110.