See Also: Net asset value arbitrage(finance)
Net asset value arbitrage(money)
Asset for asset swap(finance)
Asset for asset swap(money)
Tight money or dear money(finance)
NAV Arbitrage(money)
Tax arbitrage(money)
arbitrage(encyclopedia)
arbitrage(dictionary)
Tax arbitrage(finance)

Net asset value arbitrage (money)


Definition: [crh] For a number of assets, the most recent transaction price at 4PM ET does not fully reflect all available market information. One example is international equities that trade on exchanges that aDefinition: re located in different time zones and close 2-15 hours before U.S. markets. In addition, domestic small-capitization equities and high-yield and convertible bonds often trade infrequently and have wDefinition: ide bid-ask spreads. This can cause the most recent transaction price to be much different from the price that one would see in a liquid market at 4 PM, even for assets that trade on exchanges that aDefinition: re open at that time. Investors can take advantage of mutual funds that calculate their NAVs using stale closing prices by trading based on recent market movements. For exampDefinition: le, if the U.S. market has risen since the close of overseas equity markets, investors can expect that overseas markets will open higher the following morning. Investors can buy a fund with a stale-pDefinition: rice NAV for less than its current value, and they can likewise sell a fund for more than its current value on a day that the U.S. market has fallen. Similar opportunities exisDefinition: t when the values of infrequently or illiquidly-traded domestic assets have recently changed. Also known as Stale Price Arbitrage.