Definitions for risk arbitrage
risk ar·bi·trage

Princeton's WordNetRate this definition:0.0 / 0 votes

1. risk arbitrage, takeover arbitragenoun

   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

ChatGPTRate this definition:0.0 / 0 votes

1. risk arbitrage

   Risk arbitrage, also known as merger arbitrage, is an investment strategy that involves taking advantage of the price differences and discrepancies that occur in the market when a company announces a merger or acquisition. Often, there is a gap in the current market price and the acquisition price which provides an opportunity for profit. However, this strategy involves significant risk, as the merger or acquisition may not go through, causing potential losses.

WikidataRate this definition:0.0 / 0 votes

1. Risk arbitrage

   Risk arbitrage, or merger arbitrage, is an investment or trading strategy often associated with hedge funds. Two principal types of merger are possible: a cash merger, and a stock merger. In a cash merger, an acquirer proposes to purchase the shares of the target for a certain price in cash. Until the acquisition is completed, the stock of the target typically trades below the purchase price. An arbitrageur buys the stock of the target and makes a gain if the acquirer ultimately buys the stock. In a stock for stock merger, the acquirer proposes to buy the target by exchanging its own stock for the stock of the target. An arbitrageur may then short sell the acquirer and buy the stock of the target. This process is called "setting a spread." After the merger is completed, the target's stock will be converted into stock of the acquirer based on the exchange ratio determined by the merger agreement. The arbitrageur delivers the converted stock into his short position to complete the arbitrage. If this strategy were risk-free, many investors would immediately adopt it, and any possible gain for any investor would disappear. However, risk arises from the possibility of deals failing to go through. Obstacles may include either party's inability to satisfy conditions of the merger, a failure to obtain the requisite shareholder approval, failure to receive antitrust and other regulatory clearances, or some other event which may change the target's or the acquirer's willingness to consummate the transaction. Such possibilities put the risk in the term risk arbitrage.

Matched Categories

1. • Arbitrage

How to pronounce risk arbitrage?

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How to say risk arbitrage in sign language?

Numerology

1. Chaldean Numerology

   The numerical value of risk arbitrage in Chaldean Numerology is: 2

2. Pythagorean Numerology

   The numerical value of risk arbitrage in Pythagorean Numerology is: 3

Examples of risk arbitrage in a Sentence

1. Fred Ruffy:

   I think some of these are institutional people positioning to play this as part of a risk arbitrage if the deal moves forward.

References

1. ^ Princeton's WordNet
   http://wordnetweb.princeton.edu/perl/webwn?s=risk arbitrage
2. ^ ChatGPT
   https://chat.openai.com
3. ^ Wikidata
   https://www.wikidata.org/w/index.php?search=risk arbitrage