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You're at a fruit market. But, instead of just being able to buy apples at this fruit market, you can also sell fruit.
You're not a farmer, so you come to the market to buy some apples and you see two fruit stands. Fruit Stand A on the left
is buying and selling apples at 50 cents apiece. However, Fruit Stand B on the right is buying and selling apples at 53 cents
apiece. People are buying and selling apples at these two stands all the time, and the price at a stand could change at any
moment. But, while you're there, apples are 50 cents and 53 cents, respectively.
You're a smart person, and you quickly
realize that you can buy apples from Stand A and then sell them across the street to Stand B and make a 3-cent profit. But
you have to do it now; you can't wait. So you buy all the apples at Stand A and then run to sell them all to Stand B.
Congratulations.
You've committed fruit-stand arbitrage.
Arbitrage is exactly that: the selling of the same item between two different
markets to make a profit off the mathematical differences in price. However, it's not apples that are traded--the goods in
question are usually stocks, currencies and other securities. Arbitrage happens when you get a stock, usually a common one
like General Electric that's traded on multiple markets (Japan, Hong Kong, U.S., etc¿). The stock is usually worth within
fractions of a penny the same on each of those markets. However, there are often some minor variations.
People who
participate in arbitrage take advantage of these variations--and make a ton of money doing it. As seen in the fruit stand
example, you can make a "riskless profit" from buying and selling apples between different markets.
There are some
big hedge funds that make almost all their money off arbitrage. But, despite this simple example, arbitrage is mathematically
complex--and involves a good portion of risk if you don't know what you're doing. You probably won't be able to participate
in arbitrage directly, but you can always invest in a mutual fund that does.
Home / Markets / Industries / Energy
Wednesday, May 14, 2008
Pepco Energy Services Selected by Pennsylvania State University to Implement Energy Savings Performance Contract
Comtex
ARLINGTON, Va., May 14, 2008 /PRNewswire-FirstCall via COMTEX News Network/ ----Pepco Energy Services, a subsidiary of Pepco Holdings, Inc. (NYSE: POM) and a leader in energy savings performance contracting, has been selected to implement a comprehensive energy performance contract program for The Pennsylvania State University (PSU) at its University Park campus.
The 10-year contract calls for Pepco Energy Services to provide energy conservation measures to PSU's Chemistry Building located on its University Park campus. As part of the performance contract, Pepco Energy Services will install exhaust air heat recovery and variable air volume controls, stack variable geometry discharge dampers and controls upgrades for the air handling units and will guarantee the savings. With guaranteed annual energy savings exceeding $1 million per year, this project will save PSU more than $14M over the life of the contract. Construction will begin this year, and the project is expected to be completed in early 2009.
Laura Miller, Senior Penn State Energy Engineer points out that, "our Guaranteed Energy Savings Program (GESP) projects make up almost half (46%) of all our energy reduction efforts. The University looks forward to this important partnership with Pepco Energy Services and the many environmental and economic results that will be generated. Penn State is firmly committed to energy efficiency and will continue to play a leadership role in environmental stewardship."
"Pepco Energy Services is excited to be providing Penn State with a project that not only saves energy and improves the student work environment, but also has a positive green impact," stated John Huffman, President and Chief Operating Officer of Pepco Energy Services. "This project saves the campus electricity, steam and chilled water, and it will have the equivalent environmental effect of preventing the release of more than 3 million pounds of CO2 from the earth's atmosphere."
Since 1995, Pepco Energy Services has developed, implemented and financed over $600 million of energy savings performance contracts for more than 250 customers. Accredited by the National Association of Energy Service Companies (NAESCO), Pepco Energy Services has completed energy savings performance contracts for numerous colleges and universities, including Pennsylvania State University-Altoona, Salisbury University, Catawba College, Western Piedmont Community College, and St. Andrews Presbyterian College.
About Pepco Energy Services
Pepco Energy Services, Inc., a wholly owned subsidiary of Pepco Holdings, Inc. (NYSE: POM), is a leader in providing commercial, institutional, government and industrial customers with competitive electricity and natural gas supply and energy efficiency services. Visit www.pepcoenergy.com for more information.
Pepco Energy Services, Inc. is not the same company as Potomac Electric Power Company, and prices and services of Pepco Energy Services, Inc. are not set by the Public Service Commission.
Information contained in this news release may include forward-looking statements which should be considered in light of the risks inherent in the business of Pepco Holdings, Inc. and its subsidiaries, as discussed in public documents filed with the Securities and Exchange Commission.
SOURCE Pepco Energy Services, Inc.
http://www.pepcoenergy.com
Copyright (C) 2008 PR Newswire. All rights reserved
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