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In paragraph form and complete sentences, explain in your own words and in detail how the Law of One Price and Arbitrage Pricing Theory is

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In paragraph form and complete sentences, explain in your own words and in detail how the Law of One Price and Arbitrage Pricing Theory is used to price financial derivatives. In addition to your explanation demonstrate through an example how the Law of One price and Arbitrage Pricing Theory would be used in a real-world situation. You may draw upon your experiences in class for this example

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