Arbitrage

According to Investopedia Arbitrage is the simultaneous purchase and sale of the same asset in different markets in order to profit from tiny differences in the asset's listed price. It exploits short-lived variations in the price of identical or similar financial instruments in different markets or in different forms.

Arbitrage exists as a result of market inefficiencies and it both exploits those inefficiencies and resolves them.

15-The conversion ratio for XYZ convertible debenture is 25. If price of XYZ stock in the market is $42 per share, what is the parity price of XYZ bond?

Now assume that the price of $1000 face value of XYZ bond in the bond market is $1020. You have $10,200 available. How much money you can make riskless using arbitrage?