Investment, an exact science

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Monograph

Identifikator:: 865521182

URN:: urn:nbn:de:zbw-retromon-48767

Document type:: Monograph

Author:: Lowenfeld, Henry

Title:: Investment, an exact science

Place of publication:: London

Publisher:: The Financial Review of Reviews

Year of publication:: 1906

Scope:: 1 Online-Ressource (X, 160 Seiten)

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter VII - The world's stock markets

Collection:: Economics Books

112 Arbitrage transactions are the sales and purchases of stocks which are effected by letter, telegram and telephone between the Stock Exchanges of different countries. In these international dealings the level of the respec tive quotations at any two centres is deter mined by the current rate of exchange between them. The rate of exchange becomes the arbiter of value—hence the term arbitrage. For instance : Paris quotes Turks in francs, and it is therefore necessary to work out the French franc-quotation by the rate of exchange into its equivalent in English money before an arbitrage dealer can determine whether it is possible to buy or sell Turks more advan-, tageously through his agent on the London market than he can buy and sell them on his own Bourse. It is the constant rush on the part of arbitrageurs to buy stocks in the market where quotations are low, and to sell them in the market where quotations are high, which keeps internationally-dealt-in stocks at a uniform price at the various centres. In these international securities, of course, the most powerful centre determines the quo tation. Thus, if the Paris public is more interested in Turks than Berlin, Paris is able to absorb or supply larger quantities of stock, and it is then the Paris market which controls

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