You Own 800 Shares of Bradley Co

question 12

Multiple Choice

You own 800 shares of Bradley Co. stock that is currently priced at $33 a share. Given this price, the option delta for a $35 call option on this stock is .66. How many $35 call options do you need to hedge against a −$1 change in the price of the stock?

• A)buy 1,212 options
• B)buy 1,813 options
• C)buy 1,847 options
• D)write 1,212 options
• E)write 1,847 options

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Definitions:

Domain-Relevant Skills

Specific abilities and knowledge required to perform effectively in a particular field or area of work.

Intrinsic Task Motivation

The drive to undertake a task due to the inherent satisfaction and interest it provides, rather than for external rewards.

Creativity-Relevant Processes

Refers to the methods and approaches that facilitate the generation of novel and valuable ideas within an individual or a group.

Extrinsic Environmental Components

External factors that influence an organization's performance, including economic, political, and social conditions.