Definition of Risk Arbitrage

Financial Terms Beginning with R

What is Risk Arbitrage

Risk arbitrage, also known as merger arbitrage, involves the buying of stocks in the process of a merger or acquisition, such as between two publicly traded companies. Risk arbitrage is a popular strategy among hedge funds, in which they will buy the stock of the target company and short-sell the stock of the acquirer.

Glossary of Terms and Phrases

A financial dictionary or glossary is an essential tool to better understand the meaning of a specialized term or phrase. It would obviously make life much easier if everyone spoke the same language and used the same financial terms and phrases but that is not realistic.

We learn new languages to communicate with each other, transact business globally and to appreciate other cultures. Global finance is a specialized language that if understood and mastered, it will provide benefits that help to decrease risk and improve investment returns. Financial literacy is the foundation of developing good investment strategies and sound decision making.

Related Investment Terms


Hedge Fund


View of NYC between the Brooklyn Bridge and Manhattan Bridge
New York, New York