n NISM Certifications
X NISM Series X
Medium

An arbitrageur who finds a price difference between markets will:

Practice question from NISM Series XA- Investment Adviser (Level 1) Mock Test 7 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Inform exchanges immediately

  2. B

    Buy in the higher-priced market and sell in the lower-priced market

  3. Buy in the lower-priced market and sell in the higher-priced market

    Correct answer

  4. D

    Buy in both markets for an average price

Why this is the answer

Arbitrage profits come from purchasing low and selling high simultaneously.

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