What I learned: Arbitrage

I'd heard the word before without ever understanding it. Arbitrage is the ability to find identical investments that have differing prices and taking advantage of this disparity without risking a cent of your own money.

For example, if iPads are selling in the US for $500 but are only available in Europe for the equivalent of $600, you can borrow $500 from the bank, buy an iPad, sell it via the internet for $550, pay back the bank, and pocket the $50. You haven’t used a penny of your own money. If you owe any interest to the bank, it is probably minimal. This is arbitrage.