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Apaar Bhatnagar

· started a discussion

· 1 Months ago

confusion in the options (Question: 190727.0 )

Arbitrage is profit earned due to the variation of prices in different markets. C option can also be considered.

Question:

In the Capital Market, the term arbitrage is used with reference to_________

Options:
A)

purchase of securities to cover the sale

B)

sale of securities to reduce the loss on purchase

C)

simultaneous purchase and sale of securities to make profits from price

D)

variation in different markets

E)

Any of the above

Solution:

Ans(c);

Arbitrage is the simultaneous purchase and sale of an asset to profit from a difference in the price. It is a trade that profits by exploiting the price differences of identical or similar financial instruments on different markets or in different forms. Arbitrage exists as a result of market inefficiencies.

Knowledge Expert

· commented

· 1 Months ago

Dear Student,

Option(c) is the correct answer. We have resolved it.

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