HomeDefinitionsCompareDebt Law of one priceThe financial definition for 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. Similar MatchesAdjusted exercise priceAdjusted exercise priceTerm used in options on Ginnie Mae (Government National Mortgage Association) contracts. The final exercise price of the option accounts for the coupon rates carried on Ginnie Mae mortgages. For example, if the standard GNMA mortgage has an 9% yield, the price of GNMA pools with 13% mortgages in them is altered so that the investor receives the same yield. Aggregate exercise priceAggregate exercise priceThe exercise price multiplied by the number of shares in a put or call contract. The option premium is excluded in the aggregate exercise price. In the case of options traded on debt instruments, the aggregate exercise price is the exercise price of the underlying security multiplied by its face value. Arms length priceArms length priceThe price at which a willing buyer and a willing unrelated seller would freely agree to transact or a trade between related parties that is conducted as if they were unrelated, so that there is no conflict of interest in the transaction. Further SuggestionsAsked priceBargain purchase price option Basis price Bid price Call price Cash price Clean price Click to compare definitions of Law of one price Click to view definitions beginning la |