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Hedge Fund
Distressed Sec
Long-short
Risk Arbitrage

Arbitrage
Term category: Strategies
In 10 words or less: A strategy that involves earning a riskless profit.

Definition: Arbitrage is defined as the simultaneous purchasing and selling of a stock to take advantage of inefficient markets. Essentially, an example would be an investor buying a stock in the United States and shorting it in Europe, if it hasn't adjusted to the change in exchange rates yet. This is seen as "riskless profit" and is a technique used by many hedge funds.

StockJargon Advice: Because this is a very advanced topic, we recommend avoiding this unless you're a very experienced investor. It works great in theory but the tricky part is finding market inefficiencies.

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