Arbitrage Is the Simultaneous Buying of Securities in One Market

question 24

True/False

Arbitrage is the simultaneous buying of securities in one market and selling them in another to make a profit from price differences in the two markets.

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Definitions:

EBIT

Earnings Before Interest and Taxes; a measure of a firm's profit that includes all expenses except interest and income tax expenses.

Debt/Assets Ratio

A financial ratio that indicates the proportion of a company's assets that are financed by debt.

Common Equity

The amount of ownership interest that is common stockholders have in a company, reflecting their equity stake.

Borrow

The act of receiving funds from a lender with the agreement to return the principal amount along with interest or other charges, if applicable.