Question

Which of the following best describes the concept of arbitrage in finance?

Q: Answer-Which of the following best describes the concept of arbitrage in finance?

Arbitrage is a trading strategy used in finance where an investor takes advantage of price differences of the same asset between two or more markets. The investor buys the asset in the market where it is undervalued and immediately sells it in the market where it is overvalued, making a profit from the difference in prices. The key to successful arbitrage is to act quickly, as the price difference is usually small and the opportunity to make a profit is fleeting.