Which of the Following Statements Is False

question 16

Multiple Choice

Which of the following statements is false?

• A)The change in value of a portfolio of puts and calls on the same stock is approximated by the sum of the product of each option's delta with the change in the stock price.
• B)The change in value of a portfolio of puts and calls on the same stock is approximated by the product of the sum of each option's delta with the change in the stock price.
• C)The change in value of a portfolio of puts and calls on the same stock is approximated by the sum of the product of each option's delta with the change in the stock price plus the sum of the cross-correlated changes of each option with the other options for the same change in the stock price.
• D)The change in value of a portfolio of puts and calls on the same stock is approximated by the sum of the product of each option's delta with the change in the stock price plus half the sum of the product of option gammas with squared changes in the stock price.

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Definitions:

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating its short-term financial health and efficiency.

Cash Expenses

Payments that a business makes in cash, including operating expenses, purchasing of goods, and other transactions.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting wear and tear, deterioration, or obsolescence.

Top-Down Approach

An analysis method that begins with global or macroeconomic factors before drilling down into the specifics of individual securities or sectors.