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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.

Related Terms on BusinessDictionary

arbitrage pricing theory (APT)

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... part of the Bonds, Futures, Mutual Funds, Options and Stocks subjects.

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