arbitrageArticle Free Pass arbitrage, business operation
involving the purchase of foreign exchange, gold, financial
securities, or commodities in one market and their almost
simultaneous sale in another market, in order to profit from
price differentials existing between the markets. Opportunities
for arbitrage may keep recurring because of the working of
market forces. Arbitrage generally tends to eliminate price
differentials between markets. Whereas in less developed
countries arbitrage can consist of the buying and selling of
commodities in different villages within the country, in highly
developed countries the term is generally used to refer to
international operations involving foreign-exchange rates,
short-term interest rates, prices of gold, and prices of
securities. Foreign-exchange arbitrage, confined to spot-
exchange markets—in which exchange is bought and sold for
immediate delivery—may involve two or more exchange centres
(two-point arbitrage or multiple-point arbitrage). For example,
assume th