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People who search for and exploit arbitrage opportunities.

The simultaneous buying and selling of a security at two different prices in two different markets,

resulting in profits without risk. Perfectly efficient markets present noarbitrage opportunities. Perfectly

The purchase of securities on one market for immediate resale on

another market in order to profit from a price or currency discrepancy.

Transactions designed to make a sure profit from inconsistent prices.

An alternative model to the capital asset pricing model developed by

Stephen Ross and based purely onarbitragearguments.

A portfolio manager invests dollars in an instrument denominated in a foreign

currency and hedges his resulting foreign exchange risk by selling the proceeds of the investment forward for

Taking advantage of divergences in exchange rates in different money markets by

buying a currency in one market and selling it in another market.

Buyers and sellers seek each other directly and transact directly.

The options to identify additional, more valuable investmentopportunities

in the future that result from a current opportunity or operation.

An investment/trading strategy thatexploits divergences between actual and theoretical

A model valuing a firm in which net present value of new

investmentopportunitiesis explicitly examined.

Net present value of investments the firm is expected to make

Net present value of a firms future investments.

Unfinished researchand development that is acquired from another firm.

Government programs to promote researchand development.

Speculation on perceived mispriced securities, usually in connection with merger and

acquisition deals. Mike Donatelli, John Demasi, Frank Cohane, and Scott Lewis are all hardcore arbs. They

had a huge BT/MCI position in the summer of 1997, and came out smelling like roses.

A self-funding, self-hedged series of transactions that generally utilize mortgage

The simultaneous purchase and sale of the same asset to yield a profit.

Costs associated with locating a counterparty to a trade, including explicit costs (such as

advertising) and implicit costs (such as the value of time). Related:information costs.

A self-funding, self-hedged series of transactions that usually utilize

Striking offsetting deals among three markets simultaneously to obtain anarbitrageprofit.

Component that provides life coverage during the insureds life.

A contract with both insurance and investment components: (1) It pays off a stated

amount upon the death of the insured, and (2) it accumulates a cash value that the policyholder can redeem or

The purchasing of loans originated by others, with the servicing rights

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