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Covered interest arbitrage |
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Covered interest arbitrageA combination of transactions on two countries' securities and exchange markets designed to profit from failure of covered interest parity. A typical set of transactions would include selling bonds in one market, using the proceeds to buy spot foreign currency and foreign bonds, and selling forward the return at a future date. See also one-way arbitrage.Covered interest arbitrageOccurs when a portfolio manager invests dollars in an instrument denominated in a foreign currency and hedges the resulting foreign exchange risk by selling the proceeds of the investment forward for dollars.Covered interest arbitrage Similar MatchesCurrency arbitrageCurrency arbitrageTaking advantage of divergences in exchange rates in different money markets by buying a currency in one market and selling it in another market. ArbitrageurArbitrageurOne who profits from the differences in price when the same, or extremely similar, security, currency, or commodity is traded on two or more markets. The Arbitrageur profits by simultaneously purchasing and selling these securities to take advantage of pricing differentials (spreads) created by market conditions. See: Risk arbitrage, convertible arbitrage, index arbitrage, and international arbitrage. Conversion arbitrageConversion arbitrageThe simultaneous purchase of a stock, the purchase of a put, and the sale of a call, creating a riskless transaction. Multiple ArbitrageMultiple ArbitrageIn the context of hedge funds, a style of management where by the fund employs more than one arbitrage strategy. Portfolio manager opportunistically allocates capital among the various strategies in order to create the best risk/reward profile for the overall fund. Common strategies include merger arbitrage, convertible arbitrage, fixed income arbitrage, long/short equities pairs trading, and volatility arbitrage. In the context of equity and private equity investment, this refers to an investment in a firm where by standard multiples (earnings/price, book/price) indicate the price is far cheaper than industry averages. International arbitrageInternational arbitrageSimultaneous buying and selling of foreign securities and ADRs to capture the profit potential created by time, currency, and settlement inconsistencies that vary across international borders. Further SuggestionsarbitrageTax arbitrage Discount Arbitrage Convertible Arbitrage One-way arbitrage Special arbitrage account Triangular arbitrage Arbitrage free option pricing models Index arbitrage Triangular arbitrage Merger Arbitrage Risk controlled arbitrage Locational arbitrage Riskless arbitrage Structured arbitrage transaction Reversal Arbitrage Arbitrage Trading Program (ATP) Arbitrage bonds arbitrageur Arbitrage |
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