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The textbook definitions of arbitrage, hedging and speculation often misrepresent these operations. Arbitrage is typically defined to imply no risk, no use of own capital and the simultaneity of buy and sell transactions. These conditions may or may not hold. Hedging and speculation are invariably described to be diametrically opposite operations, given the difference in the tastes for risk of hedgers and speculators. It can be demonstrated that hedging is a speculative activity and that hedgers and speculators react to the same parameters.