ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Currency arbitrage involves the exploitation of the differences in quotes rather than movements in the exchange rates of the currencies in the currency pair. Forex traders typically practice two-currency arbitrage, in which the differences between the spreads of two currencies are exploited.

Detailed explanation-2: -A currency arbitrage is one of the foreign exchange strategies that allow a currency investor to make money from different rates offered by brokers in different currency markets for the same currency pair. The traders who carry out arbitrage are known as arbitrageurs.

Detailed explanation-3: -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-4: -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-5: -Pure Arbitrage: The arbitrageur makes a buy or sells decision right away, without having to wait for funds to clear. Retail Arbitrage: This is a popular e-commerce activity. Risk Arbitrage: Convertible Arbitrage: Merger Arbitrage: Dividend Arbitrage: Futures Arbitrage: