= Law of one price
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The <law of one price> requires traded assets or portfolios with the same terminal payoff to have the same earlier price. In a model where every discounted traded price is a true <martingale> under a common equivalent measure, it follows by taking the <conditional expectation> of that terminal payoff. With only <local martingale> prices and a lower-bound restriction on <admissible trading strategies>, it can fail: the seemingly profitable short position may have unbounded possible losses before maturity.
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