If the Hedge Ratio for a Stock Call Is 0

question 60

Multiple Choice

If the hedge ratio for a stock call is 0.70, the hedge ratio for a put with the same expiration date and exercise price as the call would be

• A)0.70.
• B)0.30.
• C)-0.70.
• D)-0.30.
• E)-.17.

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Definitions:

Common Stock

Refers to shares that represent ownership in a corporation, providing voting rights and dividends, but with no fixed dividend rate.

Shares Outstanding

The total number of a company's shares that are currently owned by shareholders, including restricted shares.

Reacquired

Refers to assets or shares that a company buys back from investors or shareholders.

Par Common Stock

The nominal or face value assigned to common stock shares in the articles of incorporation.