What is Arbitrage?

The purchasing of an asset and selling it on immediate basis for profit or in other words purchasing and selling of same  a asset in different markets in  order to get profit out of it due to price difference. An arbitrage is known as a risk free profit however, it may involve minor risk due to sudden change in market price and currency.

People who deal in arbitrage are know as arbitrageurs e.g. Bank or brokerage firm. The term is commonly used for the trading of bonds, stocks,derivatives,currencies and commodities.

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