A Put Option Is Currently Selling for $6 with an Exercise

question 48

Multiple Choice

A put option is currently selling for $6 with an exercise price of $50. If the hedge ratio for the put is −0.30, and the stock is currently selling for $46, what is the elasticity of the put?

• A) 2.76
• B) 2.30
• C) −7.67
• D) −2.76
• E) −2.30

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Definitions:

Average Years

A statistical measure that represents the mean amount of years across a given dataset, often used in contexts such as life expectancy or duration analysis.

Second-order Model

In statistics and mathematical modeling, a model that includes terms up to the second power (squared terms) to capture curvature in the relationship between variables.

Significance Level

The probability of rejecting the null hypothesis in a statistical test when it is actually true, typically denoted as alpha.

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