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Buying a good or asset in one market where price is low, and simultaneously selling in another market where price is higher. This does not involve taking any risk. Arbitrage tends to prevent the price of the same good or asset in different markets from moving further apart than a margin equal to transaction costs. Interest arbitrage is borrowing in a market with lower interest rates and simultaneously lending in a market with higher ones. See also no arbitrage.

Subjects: Economics.

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