Business operation involving the purchase of foreign currency , gold, financial securities, or commodities in one market and their almost simultaneous sale in another market, in order to profit from price differentials existing between the markets.
In the 1980s a form of speculation called risk arbitrage arose, in which speculators tried to identify companies targeted for takeover and buy blocks of their stock , to be resold at a profit when the takeover was announced and the company's stock rose in value. See also insider trading ; security .