What is the simultaneous purchase and sale of a good in order to profit from a difference in price? mediation

arbitrage

liquidity

B. Arbitrage.

Explanation:

Arbitrage can be defined as the simultaneous purchase and sale of a good in order to profit from a difference in price.

This ultimately implies that, arbitrage allows an individual to profit from the price difference between similar goods, commodity, securities or currency in different markets.

Basically, an individual might decide to almost simultaneously purchase a financial instrument such as a commodity, securities or currency and sell it in a different form or market.

An arbitrage is a type of trade that is caused as a result of market inefficiency.

For example, if a stock is trading at £80 on the London Stock Exchange (LSE) while it is trading for £81 on the Nigeria Stock Exchange (NSE) at the same time. John buy the stock on the LSE and sells the same shares immediately on the NSE and earns a profit of £1 per share. Thus, this is simply an arbitrage.