To arbitrage a price difference between two markets, you should:
A) sell in the low-price market and buy in the high-price market.
B) buy in the low-price market and sell in the high-price market.
C) sell in both markets to capture a lower average "market price."
D) none of the above

Question

Quizplus · Accepted Answer

This is known as a "buy low, sell high" strategy and is the most common type of arbitrage. By buying in the lower-priced market and then immediately selling in the higher-priced market, you can capture a profit equal to the difference in prices. Selling in the low-price market and buying in the high-price market would result in a loss, and selling in both markets would not allow you to profit from the price difference.

To Arbitrage a Price Difference Between Two Markets, You Should