What is difference between pure arbitrage and risk arbitrage

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I have three questions and I found the answer for the questions 1 & 2 from the internet. they are in yellow highlight and I want u change them. I want free plagiarism plz. so she will not tell its not from the intrernet. I want free plagiarism plz. also, the question number 3 the answer in ppt file I will attached.

1. What is the difference between pure arbitrage and risk arbitrage? If an investor observes the price of a stock trading in one exchange to be different from its price in another exchange, what form of arbitrage is applicable and how could the investor participate in that arbitrage?

Pure arbitrage involves the immediate buying and selling of similar assets trading at different price. Risk arbitrage also is based on the similar principle of buying low and selling a similar asset (or an asset with same payoffs) at a higher price. The difference is that with a risk arbitrage the investor buys blocks of the stock in anticipation of some information release. If an investor observes two similar assets trading at different prices in different exchanges, he / she shouldsell the more expensive stock and use the proceeds to purchase the cheaper stock to lock in a given spread. This would be an example of a pure arbitrage rather than risk arbitrage. We are assuming that transactions costs are negligible.

2. How do agency transactions differ from principal transactions for market makers?

Agency transactions are done on behalf of a customer. Thus the investment banker is acting as a stockbroker, and the company earns a fee or commission. In a principal transaction, the investment bank is trading on its own account. In this case the profit is made from the difference in the price that the company pays for the security and the price at which it is sold. In the first case the company bears no risk, but in the second case the company is risking its own capital.

3. What are private placements and under what SEC rule are they regulated?

https://www.dropbox.com/s/v5imwam0zqg90ez/Lecture_Securities_Dealers_and_Market_Makers.rar?dl=0

Reference no: EM131406252

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