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Meaning / Definition of

Arbitrage House

Categories: Strategies,

A financial institution that engages in arbitrage. Such firms search for market inefficiencies and securities which they feel are mispriced, and then undertake trades which allow them to make riskless profits. Arbitrage opportunities are often quite difficult to detect, since mispricings can be very small. Also, arbitrage opportunities tend to disappear almost immediately since market forces act to reverse the opportunity. Because of these characteristics of arbitrage, many arbitrage houses are equipped with very sophisticated computer software and hardware to help them identify potential opportunities and act on them very quickly. Many arbitrage houses also develop complex software-driven mathematical models to find mispricings and market inefficiencies.

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Definition / Meaning of

Community Reinvestment Act Of 1977

Categories: Banking, Economics,

Law passed by Congress in 1977 requiring banks and other depository financial institutions to help meet credit needs of the community in which the bank or financial institution is chartered and operating in. These include meeting the credit needs of low to moderate income neighborhoods, provided that they had safe and consistent operations. A bank's or depository financial institutions' compliance with the community reinvestment act is taken into consideration when a bank or depository financial institution desires to expand and build new bank branches or in mergers and acquisitions. The community reinvestment act does not specifically list any civil or punitive damages and does not list specific criteria for evaluating the performance of a financial institution. Rather, the community reinvestment act may be taken into consideration in conjunction with the equal credit opportunity act that does list specific civil and punitive damages for discriminating credit applicants based upon their race, color, religion, national origin, sex, marital status or age.

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