Since Deltas Change as Stock Values Change, Portfolio Hedge Ratios

question 59

Multiple Choice

Since deltas change as stock values change, portfolio hedge ratios must be constantly updated in active markets. This process is referred to as

• A) portfolio insurance.
• B) rebalancing.
• C) option elasticity.
• D) gamma hedging.
• E) dynamic hedging.

---

Definitions:

Observational Study

A research method where the investigator observes subjects and measures variables of interest without assigning treatments to the subjects.

Observational Study

A study where the researcher observes the outcome without manipulating any variables.

Experiment

An organized procedure to study something under controlled conditions.

Confounded

A situation in experimental design where the effects of two variables cannot be separated, leading to ambiguity in results interpretation.