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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 / Finance
Monday, May 12, 2008
CA, Inc. to Join the NASDAQ-100 Index Beginning May 19, 2008
Comtex
NEW YORK, May 12, 2008 (PrimeNewswire via COMTEX News Network) ----CA, Inc. (Nasdaq:CA) of Islandia, New York, will become a component of the NASDAQ-100 Index(r) (Nasdaq:IXNDX), the NASDAQ-100 Equal Weighted Index (Nasdaq:NDXE), and the NASDAQ-100 Technology Sector Index (Nasdaq:NDXT) prior to market open on Monday, May 19, 2008. CA, Inc. will replace Tellabs, Inc. (Nasdaq:TLAB).
With a market capitalization of approximately $11.6 billion, CA Inc. designs, develops, markets, licenses, and supports computer software products that manage information technology (IT) infrastructures. The Company's products are used in both mainframe and in distributed computing environments. CA offers various enterprise systems management, information management, and business applications solutions that govern, manage and secure the complexities of IT for customers around the world.
The NASDAQ-100 Index, launched in January 1985, is one of the most widely followed benchmarks in the world.
The NASDAQ OMX Group, Inc. is the world's largest exchange company. It delivers trading, exchange technology and public company services across six continents, and with over 3,900 companies, it is number one in worldwide listings among major markets. NASDAQ OMX offers multiple capital raising solutions to companies around the globe, including its U.S. listings market; the OMX Nordic Exchange, including First North; and the 144A PORTAL Market. The company offers trading across multiple asset classes including equities, derivatives, debt, commodities, structured products and ETFs. NASDAQ OMX technology supports the operations of over 60 exchanges, clearing organizations and central securities depositories in more than 50 countries. OMX Nordic Exchange is not a legal entity but describes the common offering from NASDAQ OMX exchanges in Helsinki, Copenhagen, Stockholm, Iceland, Tallinn, Riga, and Vilnius. For more information about NASDAQ OMX, visit www.nasdaqomx.com.
NDAQO
This news release was distributed by PrimeNewswire, www.primenewswire.com
SOURCE: The NASDAQ OMX Group, Inc.
The NASDAQ OMX Group, Inc. Media Contact: Wayne Lee +1.301.978.4875 Issuer & Investor Contact: Lisa Chaney +1.301.978.8281 CA, Inc. Investor Relations +1.631.342.6000
(C) Copyright 2008 PrimeNewswire, Inc. All rights reserved.
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