Background Note | HBS Case Collection | June 2005 (Revised October 2007)

The Law of One Price

by Joshua D. Coval, Erik Stafford, Rodrigo Osmo, John Jernigan, Zack Page and Paulo Passoni

Abstract

Demonstrates the Law of One Price in practice. Using synthetic securities, students should observe opportunities to earn profits when spreads emerge between portfolios that offer identical payoffs. Uses separate uptick financial simulation software.

Keywords: Price;

Citation:

Coval, Joshua D., Erik Stafford, Rodrigo Osmo, John Jernigan, Zack Page, and Paulo Passoni. "The Law of One Price." Harvard Business School Background Note 205-079, June 2005. (Revised October 2007.)