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Merger Arbitrage |
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Merger ArbitrageIn the context of hedge funds, a style of management that involves the simultaneous purchase of stock in a company being acquired and the sale of stock in its acquirer.Merger Arbitrage Similar MatchesArbitrageArbitrageA combination of transactions designed to profit from an existing discrepancy among prices, exchange rates, and/or interest rates on different markets without risk of these changing. Simplest is simultaneous purchase and sale of the same thing in different markets, but more complex forms include triangular arbitrage and covered interest arbitrage. 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. Riskless arbitrageRiskless arbitrageThe simultaneous purchase and sale of the same asset to yield a profit. Currency 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. Covered interest arbitrageCovered 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. Further SuggestionsStructured arbitrage transactionconversion arbitrage arbitrage Discount Arbitrage Tax arbitrage Triangular arbitrage Index arbitrage Convertible Arbitrage Arbitrage bonds arbitrageur Covered interest arbitrage One-way arbitrage Triangular arbitrage Arbitrageur Reversal Arbitrage Arbitrage free option pricing models Arbitrage Trading Program (ATP) International arbitrage Special arbitrage account Risk controlled arbitrage Locational arbitrage |
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