Introduction of the study
A central idea in modern finance is the law of one price. This states that in acompetitive market, if two assets are equivalent from the point of view of risk and return, they should sell at the same price.If the price of the same asset is different in two markets, there will beoperators who will buy in the market where the asset sells cheap and sell in themarket where it is costly. This activity termed as arbitrage, involves thesimultaneous purchase and sale of the same or essentially similar security intwo different markets for advantageously different prices.Theoretical arbitrage requires no capital, entails no risk and appears to be aneasy way of earning profits. However, real–world arbitrage calls for largeoutlay of capital, entails some risk and is a lot more complex than thedefinition suggests. A major weak link in India’s financial sector today isinadequate knowledge about arbitrage..
1.2 Object of the study
Part of Masters of Business Administration curriculum to have practicalexposure to the actual competitive environment.
1.3 Objective of the study
To know the concept of arbitrage.
To observe arbitrage trading practically.
To know how to earn risk free profit.
1.4 Rational of the study
Arbitrage trading related to NSE & BSE stock exchange.