Imagine That Your Professor Is Discussing the Prevalence of Psychological

question 37

Multiple Choice

Imagine that your professor is discussing the prevalence of psychological disorders in the general population, and he says, "A study conducted in 2012 estimated that about 11% of the population has a psychological disorder at any one time." If you were to estimate a confidence interval, based on this number-11%-you would be most likely

• A) to use the confirmation bias inappropriately.
• B) to estimate this range by using the availability heuristic, which would be biased because of recent examples.
• C) to rely too heavily on an anchor, and not make large enough adjustments to that anchor.
• D) to use decision frames inappropriately.

Understand the concept of delta neutrality and its implications for portfolio management.

Understand the impact of volatility risk on option pricing and hedging strategies.

Explain the principles behind dynamic hedging and its importance in managing option portfolios.

Differentiate between American and European options in terms of valuation and exercise strategies.

---

Definitions:

Michel Foucault

A French philosopher and social theorist known for his analyses of power, discourse, and social institutions, and for his influence on postmodern and critical theory.

Normalization

The process of making something conform to a standard, norm, or desirable pattern, often for the sake of consistency and predictability in social and technical contexts.

Discourse

Written or spoken communication or debate.

Orientalism

A concept referring to the Western representation and interpretation of Asian cultures, often based on stereotypes and the sense of Western superiority.