Glossary
- A-Share
- AAA rating
- abs.
- Accrual bond
- Accumulate
- Acquisition currency
- Actively managed fund
- Ad-hoc disclosure
- Additional margin
- Admission of securities to the Regulated Market
- Admission to the exchange
- Admissions Office
- Advance-decline (AD)
- AIBD return (ISMA return)
- AIBD return (ISMA-return)
- All-time high
- All-time low
- Allocation
- Allotment
- Alpha
- American depositary receipt (ADR)
- American depositary share (ADS)
- American-style option
- Annual General Meeting
- AQR (VWAP) executions
- Arbitrage
- Asian option
- Ask
- Ask price
- Asset class
- Asset-backed security
- Asterisk * (price addendum)
- At the money
- Attentism
- Auction principle
- Automatic exercise (warrants)
Arbitrage
A distinction is made between two different sorts of arbitrage: price difference arbitrage and cash-futures arbitrage. In the case of price difference arbitrage market players buy securities cheaply on one exchange and sell them simultaneously on another exchange at a higher price. This increases demand and hence the price of the security concerned on the lower-priced market. Conversely, the price on the higher-priced market falls as a result of the increase in supply. As a result, the prices on the different exchanges converge.
Cash-futures arbitrage entails exploiting the difference in the prices of a financial instrument on the cash and the futures markets at the same time. For example, arbitragers buy a stock option that is set to expire on the same day, expecting to sell it again immediately on the cash market at a price above the exercise price.
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