law of one price

Definition

An economic rule which states that in an efficient market, a security must have a single price, no matter how that security is created. For example, if an option can be created using two different sets of underlying securities, then the total price for each would be the same or else an arbitrage opportunity would exist.

Use law of one price in a sentence

You need to make sure that you are following the law of one price and are adapting to it as best you can.

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I did not like the economic rules knows as the Law of One Price because it made a rule up and everyone had to pay attention to it.

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A type of rule which implies that in a profiting and prosperous market the security should be entitled to a single price no matter how the security was created is known as law of one price

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