Мировая экономика 113

By arbitrage we mean the exploitation of differences between the prices of financial assets or

Currency or a commodity within or between markets by buying where prices are low and selling

Where they are higher. If wheat is cheaper in Chicago than in London after allowing for transport

And dealing costs, it will pay to buy in Chicago and sell in London. If interest rates are higher on

The Euro deposit in London than in Frankfurt, a higher return will be obtained by switching

Funds from one centre to the other. It will also pay to switch funds from the Euro deposit in

Frankfurt to a sterling deposit in London if the interest rate differential is greater than the cost of

Covering against the risk of a fall in the exchange rate of the pound against the Euro (forward

Exchange market).

Unlike speculation, arbitrage does not normally involve significant risks, since the buying and

Selling operations are carried out more or less simultaneously and the profit made does not depend

Upon taking a view on fu ture price changes. By eliminating price differentials, arbitrage contributes