Assume S = $33

question 10

Multiple Choice

Assume S = $33.00,σ = 0.32,r = 0.06,div = 0.01.You short 100 $35 strike calls at 68 days until expiration.Under a delta hedge position,what is your overnight profit/loss if the stock rises to $34.50?

• A) $9.23 loss
• B) $9.23 gain
• C) $7.62 loss
• D) $7.62 gain

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Definitions:

Long-run Cost Function

Describes the relationship between output and the cost of production when all inputs, including capital, are variable.

Marginal Cost

The production cost for one more unit of a product.

Local River

A naturally flowing body of water that is part of a community's immediate environment.

Long-run Cost Curve

Represents the cost of production when all inputs, including capital, can be varied, showing the lowest possible cost of producing each level of output.