Arbitrage

Definition

Arbitrage is the practice of taking advantage of price differences for the same asset or commodity in different markets, with the aim of making a profit by buying low and selling high.

Related terms

Efficiency: In economics, efficiency refers to the optimal allocation of resources where no individual or entity can be made better off without making someone else worse off.

Speculation: Speculation involves taking risks in financial markets by buying or selling assets with the expectation of profiting from future price movements.

Foreign Exchange Market: The foreign exchange market is where currencies are bought and sold, providing opportunities for arbitrage due to fluctuations in exchange rates between different countries.