A Hedge Ratio of 0

question 36

Multiple Choice

A hedge ratio of 0.85 implies that a hedged portfolio should consist of

• A)long 0.85 calls for each short stock.
• B)short 0.85 calls for each long stock.
• C)long 0.85 shares for each short call.
• D)long 0.85 shares for each long call.

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Definitions:

Bingeing

Engaging in excessive or uncontrolled indulgence in food or drink.

Compensatory Behaviors

Actions taken to counteract or make up for something, often seen in psychological contexts like eating disorders.

Pre-Binge

The period or phase before engaging in an episode of excessive indulgence, often associated with food, alcohol, or other substances.

Post-Binge

The period after excessive indulgence in activities like eating, drinking, or drug use, often marked by guilt, physical discomfort, or withdrawal symptoms.