OIL WEIGHS ON ASIAN MARKET

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Oil Weighs on Asian MarketsAsian markets fell Sunday after U.S. stocks plummeted on Friday. Oil remained at elevated levels in Singapore and New York going into the trading week.
Reeling from the Blow
A rocky end-of-week performance left the market on shaky ground -- and more disappointing data is expected in the week to come

The Real Reason Yahoo Rejected Microsoft?
Cavuto: The Rate That Suddenly Mattered
The Difficult Search
Just how close are we to the housing bottom?
It depends on which report you're looking at

Voices of Identity Fraud
Identity theft victims share their personal tales

Scammers Prey Upon Online Job Seekers
WATCH: How to Keep Your Wireless Network Secure
Solving the Retirement Puzzle
There's more to planning a financially-happy retirement than meets the eye
Market SnapshotIndices Movers Loan Center
Last % Change
DJIA 12209.81 -3.13
Nasdaq 2474.56 -2.96
S&P 500 1360.68 -3.09
FOX 50 957.35 -2.95

Symbol Last Price Net Change Volume
SPY 136.29 -4.49 384.28M
QQQQ 49.03 -1.52 189.14M
XLF 23.33 -1.31 156.47M
IWM 73.92 -2.28 123.99M
C 20.06 -1.16 114.25M
WM 7.53 -1.08 100.37M
PFE 17.96 -0.71 95755K
MSFT 27.49 -0.81 78501K
BAC 30.50 -1.49 70193K
INTC 22.90 -0.97 69864K

Uptick: Market Drowns in Sea of Oil; Dow Plummets 394

Analysis: Racing Industry Fuel Costs Speed Ahead


FOX Business Central


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Latest FOX Business News
Latest News Most Read Most Emailed DSG Int'l Cut At Goldman, Structural Issues Cited - 54 Minutes Ago
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Fox Business Blogs
Don’t Believe the Hype: WWDC, 3G and Sex Mean Apple’s Going Lower Next by Cody Willard
The Real Reason Why Yahoo!’s Board Rejected Microsoft? by Elizabeth MacDonald
The Difficult Search for the Housing Bottom by Elizabeth MacDonald
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Partner Headlines
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Investors Should Avoid Being Dragged Into Bear Den
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Big Shareholders Rebel at AIG
Lehman Aims to Raise More Capital
Gasoline Hits Average of $4 a Gallon
IRS Targets Billionaire's Tax Strategy
LandSource Files for Bankruptcy
Bonds Sound Diverse Alarms
JetBlue to Buy Verizon's Airfone
McCain, Obama Differ on Energy Policy
Shares Slip in Asian Trading
Changes for Wal-Mart Music Sales
Week in Review: June 6. 2008
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FOX Translator

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You're at a fruit market. But, instead of just being able to buy apples at this fruit market, you can also sell fruit. You're not a farmer, so you come to the market to buy some apples and you see two fruit stands. Fruit Stand A on the left is buying and selling apples at 50 cents apiece. However, Fruit Stand B on the right is buying and selling apples at 53 cents apiece. People are buying and selling apples at these two stands all the time, and the price at a stand could change at any moment. But, while you're there, apples are 50 cents and 53 cents, respectively.

You're a smart person, and you quickly realize that you can buy apples from Stand A and then sell them across the street to Stand B and make a 3-cent profit. But you have to do it now; you can't wait. So you buy all the apples at Stand A and then run to sell them all to Stand B.

Congratulations. You've committed fruit-stand arbitrage.

Arbitrage is exactly that: the selling of the same item between two different markets to make a profit off the mathematical differences in price. However, it's not apples that are traded--the goods in question are usually stocks, currencies and other securities. Arbitrage happens when you get a stock, usually a common one like General Electric that's traded on multiple markets (Japan, Hong Kong, U.S., etc¿). The stock is usually worth within fractions of a penny the same on each of those markets. However, there are often some minor variations.

People who participate in arbitrage take advantage of these variations--and make a ton of money doing it. As seen in the fruit stand example, you can make a "riskless profit" from buying and selling apples between different markets.

There are some big hedge funds that make almost all their money off arbitrage. But, despite this simple example, arbitrage is mathematically complex--and involves a good portion of risk if you don't know what you're doing. You probably won't be able to participate in arbitrage directly, but you can always invest in a mutual fund that does.