Fact Pattern 11-5 Dex and Carmen Are in an Auto Accident

question 19

Multiple Choice

Fact Pattern 11-5 Dex and Carmen are in an auto accident. Dex offers Carmen $2,000 if she promises not to pursue her potential legal claim against Dex. Carmen agrees. Later, Carmen discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical expenses for a latent injury.
-Refer to Fact Pattern 11-5.In Carmen's suit against Dex to recover her repair and medical expenses,Carmen will most likely recover​ 

• A) ​half the amount to pay the costs over what Dex already paid Carmen. 
• B) ​nothing. 
• C) ​the estimated amount to pay those costs and any other liability. 
• D) ​the exact amount to pay those costs and no more.

Identify and apply the relationship between call and put hedge ratios.

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.