law of one price

law of one price
An economic rule stating that a given security must have the same price no matter how the security is created. If the payoff of a security can be synthetically created by a package of other securities, the implication is that 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. Bloomberg Financial Dictionary

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law of one price UK US noun [S]
ECONOMICS the principle that in a perfect financial market goods would have the same price everywhere: »

Mobile phones reduced price differences across fish markets by almost 60% in four years, an almost-perfect example of the ""law of one price.""

Financial and business terms. 2012.

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Look at other dictionaries:

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  • price/earnings ratio — (P/E ratio) One of the methods of measuring how highly investors value the earnings of a company. It is calculated by dividing the company s share market price by its earnings per share. Traditionally, a high price/earnings ratio suggests a… …   Law dictionary

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