Suppose You Want to Hedge the Cap with the Swap

question 15

Short Answer

Suppose you want to hedge the cap with the swap, what is the hedge ratio?

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Definitions:

Alternative Hypothesis

A hypothesis that proposes a specific relationship or difference between variables, contrary to the null hypothesis.

Population Proportion

The fraction or percentage of a total population that possesses a particular characteristic.

Null Hypothesis

A statistical hypothesis that assumes no significant difference or effect in a given set of observations.

Point Estimate

A single value or statistic that serves as the best guess or best estimate of an unknown population parameter.