Riskless transactions to take advantage of profit opportunities due to a price differential or a yield differential in excess of transaction costs are called ?
Correct answer: C. arbitrage
- A. differential actions
- B. cash transaction
- C. arbitrage
- D. forward transactions
Explanation
Arbitrage is the simultaneous or near-simultaneous exploitation of price or yield differences for a riskless profit after transaction costs. It differs from ordinary trading, which generally involves market risk.
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