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. In the second part of this chapter, we will consider how firms should choose the right financing vehicle for raising capital for their investments. Arbitrage is the strategy of taking advantage of price differences in different markets for the same asset.