Final answer:
Arbitrage occurs when there is a price difference for a security in different markets, and it is a market mechanism that brings the stock price into equilibrium.
Step-by-step explanation:
Arbitrage arises when there her in one market than in another, traders can buy it in the lower-priced market and sell it in the higher-priceis a mismatch in the price of a security in different markets. mismatch in the price of a security in different markets. In this case, arbitrage is a market mechanism that will eliminate the mispricing by bringing the stock price into equilibrium. When a security is priced higher in one market than in another, traders can buy it in the lower-priced market and sell it in the higher-priced market, taking advantage of the price difference to make a profit. In this case, arbitrage is a market mechanism that will eliminate the mispricing by bringing the stock price into equilibrium. When a security is priced higd market, taking advantage of the price difference to make a profit.