Convertible arbitrage hedge funds would strip out the debt. Arbitrage is the simultaneous purchase and sale of the same asset in different markets in order to profit from a difference in its price.Capital structure arbitrageurs focus on individual issuers. They look for valuation differentials between a company's debt and equity securities. Arbitrage is the process of simultaneously buying and selling the same asset or security in different markets to take advantage of price discrepancies. The arbitrage model.