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Law of One Price - The law of one price relates to the theory that any commodity, asset or security will have the same price in more than one exchange. Should the price differ in anyway, then by what are called arbitrage opportunities an equality will be achieved. Essentially the arbitrageur will acquire said asset from one market. Then can sell it in another where the rate is higher. This allows for parity in the pricing so purchases in cheaper places will still enable the person to get the higher price. Thus allowing for it to fall under the term of having only one price. |
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