Purchasing commodities, securities, or bills of exchange in one market and immediately selling them in another to make a profit from price differences in the two markets is called

Question

Quizplus · Accepted Answer

The scenario described is an example of arbitrage, where a profit is made by exploiting price differences in different markets. Option A (profiteering) has negative connotations and implies unethical or illegal behavior. Option B (skimming) typically refers to a pricing strategy where a company charges a high price for a new product or service, rather than a trading strategy. Option D (hedging) involves taking opposite positions in different markets to offset risks, rather than making a profit from price differences.

Purchasing Commodities, Securities, or Bills of Exchange in One Market