An Investor Owns 1,000 Shares of Stock but Anticipates Its

question 15

Essay

An investor owns 1,000 shares of stock but anticipates its price may decline. To reduce the risk of loss, how many call options must be sold if the hedge ratio is 0.7?

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Definitions:

Hominoids

A group that includes all modern and extinct Great Apes and humans, characterized by larger brains, no tail, and an upright posture.

Hominins

refers to members of the human lineage after the split from the common ancestor with chimpanzees, including modern humans and extinct human species.

Ardipithecus

A genus of early hominids whose fossils provide insight into human evolution. It includes species such as Ardipithecus ramidus, which lived approximately 4.4 million years ago.

Human Family Tree

A diagrammatic representation showing the evolutionary relationships and lineage of human species from ancestral forms.