arbitrage

Vocabulary Word

Definition

'Arbitrage' is a strategy where you buy and sell the same thing in different markets at the same time to make a profit from the price difference. It's like legally making money from discrepancies in prices.

Examples in Different Contexts

In the world of art, 'arbitrage' might relate to buying artwork in one country where it's cheaper and selling it in another at a higher price. An art dealer might comment, 'The arbitrage potential in emerging markets is immense.'

Practice Scenarios

Tech

Scenario:

The fluctuating prices in different crypto exchanges offer a chance for us to increase our earnings.

Response:

Yes, there's immense potential for arbitrage in the crypto market. We should develop a well-strategized trading plan.

Economics

Scenario:

The discrepancy between stock prices in different markets suggests potential for equilibrium correction.

Response:

Exactly. This price discrepancy suggests that arbitrage activities would soon eliminate the price difference.