The Hedge Ratio of an Option Is Also Called the Option's

question 2

Multiple Choice

The hedge ratio of an option is also called the option's

• A) alpha.
• B) beta.
• C) sigma.
• D) delta.
• E) rho.

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Definitions:

Final Control Element

A device that directly manipulates a process variable to achieve a desired change, such as a valve or a motor.

Proportional Controller

A type of feedback controller that generates an output signal by multiplying the error between a desired setpoint and a measured process variable by a constant.

On/Off Control

A basic form of control used in various applications where the output is simply turned on or off, without intermediate states.

Distributive Control System

A type of automated control system that distributes control functions into smaller subsystems throughout the process but is managed by one central system.