[Solved] A trader uses a stop-loss strategy to hedge a short position in a three-month call option with a strike price of 0.7000 on an exchange rate.The current exchange rate is 0.6950 and value of the option is 0.1.The trader covers the option when the exchange rate reaches 0.7005 and uncovers (i.e.,assumes a naked position)if the exchange rate falls to 0.6995.Which of the following is NOT true? A) The exchange rate trading might cost nothing so that the trader gains 0.1 for each option sold B) The exchange rate trading might cost considerably more than 0.1 for each option sold so that the trader loses money C) The present value of the gain or loss from the exchange rate trading should be about 0.1 on average for each option sold D) The hedge works reasonably well Net Income: The total earnings of a company after deducting all expenses, including taxes and costs, from its total revenues, indicating its profitability. Generally Accepted Accounting Principles: A set of standards, principles, and procedures that guide the accounting practices and financial reporting in the U.S. Income Statement: A financial statement that reports a company's financial performance over a specific accounting period, detailing revenue, expenses, and net income. Balance Sheet: A document detailing a business's financial status at a given moment, listing the company's resources, debts, and owner's equity.