What is Arbitrage?
Arbitrage is a trade in which the market inefficiencies are exploited in pursuit of making profit. In other words, Arbitrage is buying securities in low prices from one market and selling them to the other on higher prices in order to take the benefits of odds of similar financial instruments. Thus, it gives an opportunity to have risk-free profit on assets. So, it is connected to financial investment trading of assets like stocks, currencies, bonds or commodities, but it can even go beyond. Overall, arbitrage is result of inefficiencies of the market. Generally, arbitrage helps traders gain instant profit. Types of Arbitrage There are different categories in which arbitrage is divided such as spatial arbitrage, merger arbitrage, convertible bond arbitrage, cross border arbitrage, regulatory arbitrage, telecom arbitrage and statistical arbitrage. Spatial Arbitrage: This is a very simple form of arbitrage. It is also popular with the name of geographical arbitrage. In this,