Arbitraging is a term used in finance and economics that refers to the practice of buying and selling assets in different markets to take advantage of price differences. This practice is used to make a profit by exploiting the inefficiencies in the market. In this article, we will explore the definition, origin, meaning, associations, synonyms, antonyms, and example sentences of arbitraging.
Definitions
Arbitraging is the practice of buying and selling assets in different markets to take advantage of price differences. It is a risk-free way of making a profit by exploiting the inefficiencies in the market. The term is derived from the French word “arbitrage,” which means “judgment” or “decision.”
Origin
The practice of arbitraging has been around for centuries. It was first used in the 18th century by stockbrokers in France who would buy and sell securities in different markets to take advantage of price differences. The term “arbitrage” was first used in the 19th century to describe this practice.
Meaning in different dictionaries
According to the Merriam-Webster dictionary, arbitraging is “the purchase of a security, commodity, or currency in one market for immediate resale in another market in order to profit from a price discrepancy.” The Oxford English Dictionary defines it as “the practice of taking advantage of a price difference between two or more markets.”
Associations
Arbitraging is often associated with high-frequency trading, which is a type of trading that uses algorithms to buy and sell assets at high speeds. It is also associated with hedge funds, which use arbitrage strategies to make a profit.
Synonyms
The synonyms of arbitraging include trading, buying and selling, speculation, and investing.
Antonyms
The antonyms of arbitraging include holding, long-term investing, and buy-and-hold investing.
The same root words
The same root words as arbitraging include arbitrator, arbitration, and arbitrate.
Example Sentences
- The hedge fund made a profit by arbitraging between the stock and bond markets.
- The trader was able to make a quick profit by arbitraging between the currency markets.
- The practice of arbitraging is used to take advantage of price differences in different markets.