arbitrage

"Buy low, sell high" is the mantra of the stock market. Perhaps the most extreme example of this is arbitrage, the act of buying and selling goods simultaneously in different markets to gain an immediate profit. Impressive, but tricky.

Although the meaning of the word arbitrage as used today is relatively new, dating back to the late 19th Century, the word itself can be traced back to the Latin arbitrārī, with the meaning "to regulate." In English, arbitrage first meant "using personal judgment." If you practice arbitrage, you'll need to use great personal judgment in dealing with varying stock prices. Remember to pronounce the last syllable "trahzh," as if it were French.

Definitions of arbitrage
  1. noun
    a kind of hedged investment meant to capture slight differences in price; when there is a difference in the price of something on two different markets the arbitrageur simultaneously buys at the lower price and sells at the higher price
    see moresee less
    types:
    risk arbitrage, takeover arbitrage
    arbitrage involving risk; as in the simultaneous purchase of stock in a target company and sale of stock in its potential acquirer; if the takeover fails the arbitrageur may lose a great deal of money
    type of:
    investing, investment
    the act of investing; laying out money or capital in an enterprise with the expectation of profit
  2. verb
    practice arbitrage, as in the stock market
    see moresee less
    type of:
    merchandise, trade
    engage in the trade of
Word Family
EDITOR’S CHOICE

Test prep from the experts

Boost your test score with programs developed by Vocabulary.com’s experts.

  • Proven methods: Learn faster, remember longer with our scientific approach.
  • Personalized plan: We customize your experience to maximize your learning.
  • Strategic studying: Focus on the words that are most crucial for success.

SAT/PSAT

$29.95
  • Number of words: 500+
  • Duration: 8 weeks or less
  • Time: 1 hour / week

TOEFL

$29.95
  • Number of words: 500+
  • Duration: 10 weeks or less
  • Time: 1 hour / week

ACT

$29.95
  • Number of words: 700+
  • Duration: 10 weeks
  • Time: 1 hour / week