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Short Selling, Arbitrage, and the Law of One Price (a) Short selling is the practice of selling securities that the seller does not own. How

Short Selling, Arbitrage, and the Law of One Price

(a) Short selling is the practice of selling securities that the seller does not own. How is it initiated? How is such a transaction closed? How many counterparties are involved?

(b) How does the practice of short-selling relate to arbitrage and the law of one price?

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