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Finance Dictionary and Glossary of Investment Terms
Traditionally, the simultaneous purchase of stock in a company being acquired and the sale of stock of the acquirer. Modern risk arbitrage focuses on capturing the spreads between the market value of an announced takeover target and the eventual price at which the acquirer will buy the target's shares.
Arbitrage involving risk.
The simultaneous purchase of stock in a company which is being acquired and the sale of stock in the acquiring company.