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1 co. is listed on 2 stock exchanges, w/ a diff. price on each--will the two prices converge over time?

1 co. is listed on 2 stock exchanges, w/ a diff. price on each--will the two prices converge over time?

Postby orick » Sun Jul 01, 2012 10:57 am

When one and the same company is listed on both a Canadian stock exchange and the Frankfurt stock exchange, trading at a different price on each, what is most likely to happen to the two prices over time? Will the prices converge or diverge over time? If I get my broker to buy the stock on the Frankfurt exchange, and then it comes time to sell it later on, is there anything that I should be concerned about regarding the relative liquidity of the stocks on the Frankfurt exhange? (as an American trader).
orick
 
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1 co. is listed on 2 stock exchanges, w/ a diff. price on each--will the two prices converge over time?

Postby wendel3 » Sun Jul 01, 2012 11:02 am

are they the excat same stock? Not likely if they are on two different exchanges.
wendel3
 
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1 co. is listed on 2 stock exchanges, w/ a diff. price on each--will the two prices converge over time?

Postby armonde » Sun Jul 01, 2012 11:05 am

The same stocks often trade on different exchanges between countries. But it isnt likely that they are going to have a different price. That would create an arbitrage opportunity, and that isnt very likely. The difference could just be the difference in the currency exchange rate.
armonde
 
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