Which of the following refers to the purchase of securities in one market for immediate resale in another to profit from a price discrepancy? A. Exercise B. Straddle C. Arbitrage D. Swap

1 answer
Question:

Which of the following refers to the purchase of securities in one market for immediate resale in another to profit from a price discrepancy?
A. Exercise
B. Straddle
C. Arbitrage
D. Swap

Answers

Answer: Arbitrage Explanation: Arbitrage occurs when the price of a security is different in two markets. In such a case, many investors starts earning profits by purchasing that security from the market having low prices and simultaneously selling it to another having high price. The profits are made only for a shorter time period and are highly dependent on the transaction costs in the markets.

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