risk arbitrage
Học thuậtThân thiện
Definition
- Noun:
- A form of arbitrage involving financial risk: Specifically, it refers to the simultaneous buying and selling of securities (typically stocks) of companies involved in a potential corporate takeover or merger. The arbitrageur profits from the difference between the current market price and the anticipated takeover price, but bears the risk that the deal may fail, potentially resulting in significant financial loss.
Usage Examples
- Noun:
- The hedge fund specialized in risk arbitrage, betting on the completion of announced mergers.
- Engaging in risk arbitrage requires careful analysis of regulatory approval chances and financing contingencies.
Advanced Usage
- "to engage in risk arbitrage": to participate in this specific high-stakes investment strategy.
- Only sophisticated investors should engage in risk arbitrage due to the inherent uncertainty.
Variants and Related Words
- Arbitrage (n): The general practice of buying and selling assets in different markets to profit from price differences, typically with minimal risk.
- Arbitrageur (n): A person who engages in arbitrage.
- Merger arbitrage: A synonym often used interchangeably with "risk arbitrage," focusing on mergers and acquisitions.
Synonyms
- Merger arbitrage
- Takeover arbitrage
Related Phrases
- Event-driven arbitrage: A broader category of investment strategies, including risk arbitrage, that seek to profit from anticipated corporate events.
Noun
- arbitrage involving risk; as in the simultaneous purchase of stock in a target company and sale of stock in its potential acquirer; if the takeover fails the arbitrageur may lose a great deal of money