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    Question

      Which of the following best describes financial

    arbitrage?
    A Referring to a third party for selling an unsettled dispute Correct Answer Incorrect Answer
    B Difference between the spot rate and forward rate Correct Answer Incorrect Answer
    C Making profit due to disparities in the price in different Markets Correct Answer Incorrect Answer
    D Quoting a rate for both buying and selling a security Correct Answer Incorrect Answer
    E All of the above Correct Answer Incorrect Answer

    Solution

    Arbitrage is  the simultaneous purchase and sale of the same asset in different markets in  order to profit from tiny differences in the asset's listed price. It exploits short-lived variations in the price of identical or similar financial instruments in different markets or in different forms.

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