An arbitrageur is someone who:
A) always takes the long position in a futures contract.
B) always takes the short position in a futures contract.
C) seeks the high returns that come from the high risk inherent in futures markets.
D) simultaneously buys and sells financial instruments to benefit from temporary price differences.

Question

Quizplus · Accepted Answer

Arbitrageurs look for temporary price differences in financial instruments and make a profit by simultaneously buying and selling them. This involves taking opposite positions in same or similar assets in different markets or exchanges to benefit from differences in price. Therefore, option D is the correct answer. Options A and B do not capture the essence of arbitrage, and option C is not necessarily true as arbitrage can sometimes involve minimal risk.

An Arbitrageur Is Someone Who