Delta Neutral

question 39

Multiple Choice

Delta neutral

• A) is the volatility level for the stock that the option price implies.
• B) is the continued updating of the hedge ratio as time passes.
• C) is the percentage change in the stock call option price divided by the percentage change in the stock price.
• D) means the portfolio has no tendency to change value as the underlying portfolio value changes.
• E) is the volatility level for the stock that the option price implies and is the percentage change in the stock call option price divided by the percentage change in the stock price.

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Definitions:

Fixed Factors

Inputs in production that cannot be altered in the short term, such as buildings and machinery.

Output

The amount of goods and services produced by a business, industry, or economy.

Marginal Cost

The cost added by producing one additional unit of a product or service, important for decision-making in resource allocation.

Average Total Cost

The total cost of production divided by the quantity of output produced; it includes all fixed and variable costs.