Which of the following refers to the purchase of securities in one market for immediate resale in another to profit from a price discrepancy?

A. Exercise

B. Straddle

C. Arbitrage

D. Swap

Answer: Arbitrage

Explanation: Arbitrage occurs when the price of a security is different in two markets. In such a case, many investors starts earning profits by purchasing that security from the market having low prices and simultaneously selling it to another having high price.

The profits are made only for a shorter time period and are highly dependent on the transaction costs in the markets.