LAW OF ONE PRICE


Meaning of LAW OF ONE PRICE in English

An economic rule stating that a given security must have the same price regardless of the means by which one goes about creating that security. This implies that if the payoff of a security can be synthetically created by a package of other securities , the price of the package and the price of the security whose payoff it replicates must be equal. If it is unequal, an arbitrage opportunity would present itself.

Campbell R. Harvey. Hypertextual finance English glossary.      Английский словарь гипертекстовых финансов.