BANKING AFFAIRS

Detailed explanation-1: -Arbitrage is trading that exploits the tiny differences in price between identical or similar assets in two or more markets. The arbitrage trader buys the asset in one market and sells it in the other market at the same time to pocket the difference between the two prices.

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 pure arbitrage event exists when market-quoted prices imply the existence of a riskless profit opportunity. That is, an arbitrageur is able to produce a profit by simultaneously buying the asset in one place and selling it in another. This particular type of operation is termed a cross market arbitrage.